The Morgan Stanley - Dean Witter Merger
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR209
Case Length : 19 Pages
Pages Period : 1997-2005
Organization : Morgan Stanley & Company; Dean Witter, Discover & Company
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Investment Banking and Financial Services
To download The Morgan Stanley - Dean Witter Merger case study (Case Code: BSTR209) click on the button below, and select the case from the list of available cases:
Price:
For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges
» Business Strategy Case Studies
» Case Studies Collection
» Business Strategy Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Case Studies by Industry
» Case Studies by Company
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
|
|
<< Previous
A Mega Merger Contd...
After the merger, Purcell and Mack announced, "The combination of these three powerful and distinctive brands will create a global powerhouse with unmatched origination and distribution skills and a unique balance between institutional and individual investor capabilities."5
|
The stock markets reacted positively to the news. On the day the merger was
announced, the Morgan Stanley stock rose by 14% to US$ 65.25 and that of Dean
Witter by 5% to US$ 40.62. Ten months after the merger, the name 'Discover' was
dropped and the company was called Morgan Stanley Dean Witter. Initially, the
merger seemed to be successful. However, there were glaring differences between
Morgan Stanley and Dean Witter, especially on the culture front, and these
persisted. A few years after the merger, differences between Purcell and Mack
came to light and this led to the ouster of Mack in 2001. The merged company
could not escape the bear run in the market in the early 2000s.
|
|
The total revenues of the company dropped from US$ 44.99 billion in 2000 to US$ 32.93 billion by 2002. Net revenues dropped from US$ 25.99 billion to US$ 19.07 billion during the same period. Purcell was also criticized for his management practices, which had led to the exodus of several key executives from Morgan Stanley. These events culminated in Mack returning to the company in 2005, replacing Purcell.
|
|
Background Note
Morgan Stanley
Morgan Stanley was founded in 1935 as an investment bank by Henry Morgan
and Harold Stanley, former employees of JP Morgan,6
after the Glass Steagall Act,7 which
prevented financial institutions in the US from carrying out both
commercial and investment banking activities, came into force.
To comply with the Act, JP Morgan & Company had to split its securities
and commercial banking businesses and this led to the establishment of
Morgan Stanley as a separate entity... |
Excerpts >>
|
