Morgan Stanley (MS) today announced that Mitsubishi UFJ Financial Group (MTU), Japan’s largest financial group and the world’s second largest bank holding company with $1.1 trillion in bank deposits, had closed on a $9 billion equity investment in Morgan Stanley (MS) that gives MUFG a 21 percent ownership interest in Morgan Stanley (MS) on a fully-diluted basis.

The deal was first announced back on September 22nd, but an expected announcement of the closing had not been forthcoming, causing the investment community to speculate on whether MUFG was backing out.

The stock closed at $27.09 on September 22nd when the deal was first announced. On October 7th when the deal received regulatory clearances both in the U.S and abroad, the stock opened at $24.28. On Friday 10/10/08, it closed at $9.68.

With Mitsubishi buying preferred stock with a conversion price of $25.25 per share as part of the deal, Wall Street was left wondering whether Mitsubishi would go forward with the deal under the same terms, with the stock having lost over half its value since the deal was announced.

The deal was revised, and under the revised terms of the transaction, MUFG has acquired $7.8 billion of perpetual non-cumulative convertible preferred stock with a 10 percent dividend and a conversion price of $25.25 per share, and $1.2 billion of perpetual non-cumulative non-convertible preferred stock with a 10 percent dividend.

Tags: Morgan Stanley  Mitsubishi UFJ Financial Group