Fingers crossed … toes crossed … legs crossed … arms crossed … eyes crossed … sign of the cross …

MUFG Aims to Sweeten Terms of Deal for Morgan – WSJ.com

Morgan Stanley and Mitsubishi UFJ Financial Group Inc. worked Sunday to finish their $9 billion pact, as both sides pushed to keep the general terms of the deal intact while sweetening key details for the Japanese banking giant, people familiar with the matter said.

While some points could change as talks progressed Sunday evening, Morgan Stanley will likely announce early Monday a renewed commitment to sell a 21% stake to MUFG for $9 billion.

But under new terms being discussed, the New York investment bank would sell only preferred shares, instead of a mix of preferred and common shares. The conversion price for the convertible preferred shares would come down to the low $20s from $31,people familiar with the matter said, reflecting the recent share price drop for Morgan Stanley, which closed Friday at $9.68. The rest of the deal would be in perpetual preferred shares.

The new wrinkles make the deal more expensive for Morgan Stanley and possibly could fall below some investors’ expectations for a dramatic weekend rescue of the firm. But Morgan Stanley is hoping that finishing the investment on schedule by Tuesday will boost confidence among investors who worried the entire deal could fall through.