Davis Polk is advising Morgan Stanley in connection with its agreement with Mitsubishi UFJ Financial Group, Inc. (MUFG) to convert MUFG’s outstanding convertible preferred stock in Morgan Stanley into Morgan Stanley common stock. Under the terms of the transaction, MUFG will exchange convertible preferred stock with a face value of $7.8 billion and a 10% dividend for 385 million shares of Morgan Stanley common stock, reflecting an increase in the conversion rate of 75 million shares and providing MUFG with an ownership interest in Morgan Stanley of 22.4%. As part of the overall transaction, certain changes to the corporate governance aspects of the parties’ relationship were agreed, including MUFG’s right to designate representatives to serve on Morgan Stanley’s board of directors.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. MUFG is one of the world’s leading financial groups, with total assets of more than $2.4 trillion as of December 31, 2010.

The Davis Polk corporate team includes partners Thomas J. Reid, John M. Brandow and Marc O. Williams, and associates James E. Elworth, Derek Dostal and Christina Henderson. Partner Po Sit and associate Ethan R. Goldman are providing tax advice. Partners Randall D. Guynn and Luigi L. De Ghenghi are providing bank regulatory advice. All members of the Davis Polk team are based in the New York office.