Mitsubishi UFJ Financial Group Inc. said Wednesday it will acquire $705 million worth of common stock to be issued by Morgan Stanley, up from the $600 million worth it had announced earlier.
MUFG also said the transaction will involve the acquisition of 29.375 million shares, up from the 25 million it had announced earlier this week. The transaction, which had been planned for Wednesday, will now take place May 22 instead.
MUFG will not incur additional costs through the transaction, which will involve effectively swapping part of the preferred shares MUFG holds in the U.S. investment bank for the common stock.
Morgan Stanley said last week it will raise capital by selling common stock and bonds after the U.S. government announced results of its “stress tests” on major U.S. banks that showed the investment bank needs to boost capital by $1.8 billion to weather a possible further deepening of the global recession.
The share acquisition is apparently aimed at offsetting the dilution in its stake in Morgan Stanley that is expected to result from the struggling U.S. bank’s additional stock issue.
Last October, MUFG acquired $9 billion worth of preferred shares in Morgan Stanley and took a 21 percent stake in the investment bank on a fully diluted basis.
In a separate move, sources said Mitsubishi UFJ Trust & Banking Corp. might give up on acquiring NikkoCiti Trust and Banking Corp., a deal that was planned for April.
In March, Mitsubishi UFJ Trust unveiled a plan to postpone the deal, citing heavy losses NikkoCiti Trust was feared to incur on its acquisition of loan claims from Tokyo-based moneylender SFCG Co.
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