Morgan Stanley, Warburg Announce Merger Talks; Pact Would Create 2nd-Biggest Investment Bank
Two of the most respected names in the history of finance - Morgan Stanley Group Inc. and S.G. Warburg Group PLC - announced today that they are in merger talks.</br></br>If the deal goes through, Morgan Stanley would become one of the largest investment banks in the world and the most influential one in London and Europe, according to analysts.</br></br>The proposed deal, under which Morgan Stanley would control two-thirds of the combined firm, dramatizes the global nature of finance today and the preeminence of U.S. firms, said Sam Hayes, a professor at the Harvard Business School and an expert on the investment banking industry.</br></br>"Warburg is the only real competitor of comparable size to U.S. firms," Hayes said. "The international investment banking business is dominated by U.S. firms. This acquisition by Morgan Stanley would eliminate the last competitor."</br></br>Hayes noted that as finance has become more international - with global sales of stocks and bonds and mega-mergers that leap national borders - investment banks increasingly need size and reach to compete effectively.