Morgan Stanley and Mitsubishi are not yet talking about renegotiating Mitsubishi’s investment, “people familiar with the matter” tell the WSJ. But Morgan Stanley is bracing for such talks, says Charlie Gasparino.
We believe there might not be be “talks,” but we will be very surprised if Mitsubishi just wires $9 billion to Morgan Stanley on Tuesday. The investment was struck at $25. Morgan Stanley’s stock is now $8. Morgan Stanley’s hedge fund clients have reportedly fled, and Moodys is threatening a downgrade. If those aren’t material adverse changes, we don’t know what are.
Indeed, Charlie Gasparino at CNBC is reporting that people at Morgan Stanley are expecting Mitsubishi to try to renegotiate the terms of the deal.
In any event, if Mitsubishi’s money doesn’t come through, we think Morgan Stanley will likely need to be bailed out by the Treasury.
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