Morgan Stanley, Dean Witter To Merge

NEW YORK: In a move that could presage a rush of consolidation on Wall Street, Morgan Stanley and Dean Witter announced a $9.9 billion merger to form the world's largest securities firm. Federal regulators are expected to raise no objections to the plan, which pairs Morgan Stanley, the investment banking firm started by J.P. Morgan, and Dean Witter, the nation's third-largest retail brokerage house, to form Morgan Stanley, Dean Witter, Discover & Co. The new company's reach will be as long as its name. With combined assets of more than $270 billion, the firm will provide a host of services, from selling stocks to individual investors and offering credit cards to financing mergers and acquisitions. The merger was driven by the imminent change in financial regulations which will remove many of the barriers between banks and investment firms. All over Wall Street, financial powerhouses are talking about possible mergers that could leave them at the top of a heap that will be dominated by a few giant firms. "This is being done in anticipation of a new world that will come about in the next decade," says TIME's Bernard Baumohl. "There's no question this is just the beginning." One potential problem: whether the distinct corporate cultures of the two companies can be blended into one seamless operation. While investment bankers tend to view brokers with disdain, seeing them as penny salesmen trying to milk old ladies of their life savings, brokers feel that investment bankers, with their plush offices and luxury perks, are wasteful and out of touch. The initial reaction on Wall Street, though, was positive, sending both stocks higher. Dean Witter finished up 2 1/8 at 40 3/4, while Morgan Stanley rose 7 3/4 to 65 1/8.