Morgan Stanley Sells 21% Stake For $9 Billion To Japan's Mitsubishi UFJ

New York, NY (AHN) - Morgan Stanley said on Monday that the firm has decided to sell a 21 percent stake to Japan's Mitsubishi UFJ Financial Group Inc. for $9 billion or around $29 a share, the company said.

As a part of the strategic alliance, both the companies have agreed to allow at least one person representing Mitsubishi UFJ Financial Group to join the board of Morgan Stanley.

Mitsubishi UFJ will purchase $3 billion of Morgan Stanley's common stock and $6 billion of the firm's convertible preferred stock that pays a 10 percent dividend, according to a statement issued by Morgan Stanley on Monday.

The current offer is a premium over the investment bank's share price at the end of last week on Friday, when it closed at $24.75 a share.

Under the agreement, Mitsubishi UFJ will have the right to maintain a 20 percent investment ratio in Morgan Stanley, and, as long as Mitsubishi UFJ holds an investment ratio of 10 percent or more in Morgan Stanley.

Morgan Stanley became one of the last two independent investment banks to convert its status to bank holding companies last week.

The firm was granted approval by the U.S. Federal Reserve Board of Governors to become a Federal Bank Holding Company, killing the investment banking model that dominated Wall Street for over 20 years.

Mitsubishi UFJ Financial Group is Japan's largest banking group and the world's second largest bank holding company with $1.1 trillion in bank deposits.

The closing of the transaction would be subject to regulatory approvals and other customary conditions, Morgan Stanley said.

Shares of Morgan Stanley rose $1.42, or 5.74 percent, to $23.33 at 01:16 p.m. in New York Stock Exchange composite trading on Monday. While, shares of Mitsubishi UFJ Financial Group traded down by 6.82 percent in Asia.