Why did Morgan Stanley Dean Witter fly its international top brass to an urgently cobbled-together press conference in Madrid, five days after the news leaked of an acquisition so tiny in the grand scheme of its financials that the firm did not even have to report it publicly? Because the deal kicks off the European roll-out of Morgan Stanley Dean Witter's global strategy.
When the news broke on February 4 that Morgan Stanley Dean Witter was about to buy up 100% of Spain's largest independent brokerage house, AB Asesores, the talking point was the price - put at anywhere between $342 million and $480 million. The deal will enrich the firm's partners, particularly the three founders - president Salvador García-Atance, Pedro Guerrero and Ignacio Garralda - who each hold a 15% stake.
For Morgan Stanley Dean Witter, the deal is a drop in the ocean. AB Asesores' $122 million revenue in 1998 represents less than 1% of Morgan Stanley Dean Witter's $16.4 billion. While AB Asesores' $3.5 billion of assets under management is impressive by Spanish standards, it is just 1% of the total managed by Morgan Stanley Dean Witter worldwide. The price is peanuts given Morgan Stanley Dean Witter's $53 billion of capital.