It seems that Morgan Stanley is looking for a money center bank to bolster their position according to this article.
According to the Times, Morgan Stanley Chief Executive John Mack received a phone call from Wachovia (NYSE:WB) expressing interest in the bank.
The talks are preliminary, the newspaper says, and no deal may emerge. Morgan Stanley is considering other options, as well, the newspapers report, and other banks have expressed interest in the company.
Wachovia currently has a market cap of $19.48 billion. Morgan has $77 billion in cash according to their balance sheet. So they could conceivably do an all cash deal for Wachovia and still have some capital to fall back on in case they need it. Supposedly Wachovia is almost done cleaning out their balance sheet if you believe their CEO Robert Steel. It also seems that Wachovia came to Morgan and not the other way around so there probably won't have to be a proxy fight or other such nonsense.
I can see the two companies joining up because it bolsters both of their positions. Morgan will get market confidence back up and a depositor base to fall back on if they need it and Wachovia doesn't have to sell themselves at a fire sale price if there is a run on them. This article also shows what could come out of both of them joining forces.
A deal would marry a company with a dominant investment bank and trading business with Wachovia, the No. 4 U.S. commercial bank with branches spanning 21 states. It would also create the largest retail brokerage force in the country with more than 20,000 advisers.
No comments:
Post a Comment