I thought that Matt Dioguardi’s comment here was a reminder that it’s often better to be lucky than good. Well, maybe not, as the U.S. stock market continued its freefall and those pieces of investment banks that Japanese financial institutions had been picking up are turning out to be even less of a bargain than they looked when they cut those deals. Fortunately for Mitsubishi-UFJ though, a handshake was apparently not enough for the deal to go through. After Morgan Stanley saw its stock plummet, it is sweetening the deal, reportedly leaving Mitsubishi-UFJ with all—instead of 2/3rds—of its new holdings in convertible preferred shares with a 10% annual dividend (that would be junk bond territory if they were not subordinated to debt), mostly at a much lower conversion rate than envisioned. Moreover, Treasury may be on the verge of offering some kind guarantee that the “if the United States were to inject money into Morgan Stanley at a later time — a step the Treasury has ruled out for now — the move would not wipe out Mitsubishi’s investment.”
Not yet sealed and delivered; this has been a momentous weekend.