Morgan Stanley agreed to sell up to a fifth of the company to Mitsubishi
UFJ Financial Group (MUFG), one of Japan's largest banks, the companies
announced Monday.
The Tokyo-based financial institution said it had entered into an agreement
to acquire anywhere between 10% and 20% of Morgan Stanley's common
stock.
Investors cheered the news as Morgan Stanley (MS, Fortune
500) shares gained 10% in morning trading...
...Morgan Stanley Chairman and CEO John Mack said that the partnership with
Mitsubishi UFJ, or MUFG, would be "valuable" as Morgan Stanley transforms itself
into a more diversified financial institution.
"This strategic alliance with Mitsubishi UFJ can put Morgan Stanley in an
even stronger position as we look to realize the opportunities we see in the
rapidly changing financial marketplace," Mack said in a statement.
http://money.cnn.com/2008/09/22/news/companies/mufg_morgan_stanley/index.htm?postversion=2008092212
My Response: As read in Chapter 4, this joint relationship between Morgan Stanley and MUFJ is an example of joint ventures. While reading the chapter it tells us, "International joint ventures/strategic alliances have tended to be fruitful for Japanese companies but disappointing for American and European partners." When it comes to Japanese companies, they don't follow the same rules as American companies, which makes it difficult to continue joint ventures with them. I believe this was not a smart move on Morgan Stanley's behalf because of the known information on Japanese businesses. They don't believe that a contract is a bind agreement, they believe that if circumstances change within the company they are jointing with, that re-negotiation is applicable.
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