MUFG and Morgan Stanley Conclude Definitive Agreements for Securities Joint Venture in Japan
Mitsubishi UFJ Financial Group, Inc. (“MUFG”) and Morgan Stanley announced March 30 that they have entered into definitive agreements to integrate their securities operations in Japan, and are expected to commence joint venture operations as of May 1, 2010. Through a joint ownership structure, the parties will collaborate in a number of business and product areas in Japan, taking an industry leading position and offering a full range of institutional businesses, a large domestic retail brokerage network and significant global reach.
MUFG and Morgan Stanley, in a move that will allow them to leverage their respective strengths and networks, agreed to create two companies comprising their joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”), and Morgan Stanley MUFG Securities Co., Ltd. (‘MSMS”). MUMSS will continue the existing Japan-based retail, middle markets, capital markets, and sales and trading businesses of Mitsubishi UFJ Securities Co., Ltd. (“MUS”). The investment banking team of Morgan Stanley Japan Securities Co., Ltd. (“MSJS”) will be integrated with the investment banking team of MUS to create the preeminent investment banking organization in Japan, serving both MUFG’s and Morgan Stanley’s significant local and global client networks.
MUFG will hold a 60 percent interest in MUMSS while Morgan Stanley holds a 40 percent interest, making MUMSS a consolidated entity of MUFG. MUFG will designate Fumiyuki Akikusa as MUMSS’ President and CEO. MUFG will also designate Hideyuki Nakajima as Deputy President and Chief Executive Officer of Retail and Middle Markets, and will designate Toshiyuki Hatakama as Deputy President and Chief Executive Officer of Sales and Trading.
Morgan Stanley will designate Haruo Nakamura as Deputy President and Chief Executive Officer of MUMSS’s Investment Banking. MSMS will comprise the existing sales and trading and capital markets operations of MSJS.
While the economic interests of MUFG and Morgan Stanley in MSMS will be 60 percent and 40 percent respectively, Morgan Stanley will have a 51 percent voting interest in MSMS and MUFG will have 49 percent, making MSMS a consolidated Morgan Stanley entity. Morgan Stanley will designate Jonathan B. Kindred as President and Chief Executive Officer.
The two joint venture companies will collaborate in providing capital markets services to investment banking clients of MUFG and Morgan Stanley and in offering a wide range of products and services, including Morgan Stanley’s global products and services to MUFG’s retail and middle market customers in Japan as well as to investment banking clients of both parties. The two joint venture companies will continue to offer products and services in sales and trading and research areas separately.
Nobuo Kuroyanagi, President and Chief Executive Officer of MUFG, said, “Finalizing this agreement with Morgan Stanley represents a tremendous step forward for our two organizations’ overall strategic alliance. MUMSS and MSMS aim to effectively meet the increasingly sophisticated and diverse financial needs of our extensive client base by merging MUFG’s comprehensive domestic financial service network with MS’s global reach and high quality products and services.”
James P. Gorman, President and Chief Executive Officer of Morgan Stanley, said, “Today’s agreement underscores our strong commitment to Japan. We look forward to pursuing our common goals to create a new powerful leader in the Japanese securities industry, while continuing to leverage our strong global strategic alliance with MUFG.”