SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
DEAN WITTER, DISCOVER & CO.
(Name of Issuer)
Common Stock, Par Value $0.01 per Share
(Title of Class of Securities)
0008834351
(CUSIP Number)
Jonathan M. Clark, Esq.
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Telephone: (212) 761-4000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 4, 1997
(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
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CUSIP No. 0008834351
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Morgan Stanley Group Inc.
I.R.S. Identification No. 13-2838811
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(2) Check the Appropriate Box if a Member of Group (See Instructions)
|_| (a)
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|_| (b)
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(3) SEC Use Only
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(4) Sources of Funds (See Instructions) WC, BK, OO
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e). |_|
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(6) Citizenship or Place of Organization Delaware
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Number of (7) Sole Voting Power 63,922,570 1, 2
Shares -----------------------------------------------------
Beneficially (8) Shared Voting Power None
Owned by -----------------------------------------------------
Each (9) Sole Dispositive Power 63,922,570 1, 2
Reporting -----------------------------------------------------
Person (10) Shared Dispositive Power None
With -----------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
63,922,570 1, 2
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(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) |_|
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(13) Percent of Class Represented by Amount in Row (11)
16.6% 3
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(14) Type of Reporting Person (See Instructions) CO, HC
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1 The shares of common stock of Dean Witter, Discover & Co.
(the "Issuer") covered by this report are purchasable by Morgan Stanley Group
Inc. ("Morgan Stanley") upon exercise of an option (the "Option") granted to
Morgan Stanley pursuant to the Stock Option Agreement dated as of February 4,
1997 between Issuer and Morgan Stanley (the "Stock Option Agreement") and
described in Item 4 of this report. Prior to the exercise of the Option, Morgan
Stanley is not entitled to any rights as a stockholder of the Issuer as to the
shares covered by the Option. The number of shares of common stock of the Issuer
purchasable by Morgan Stanley under the Option, which is initially set to equal
63,922,570 shares, will be adjusted if necessary so that the number of shares
purchasable by Morgan Stanley upon exercise of the Option is equal to 19.9% of
the total outstanding shares of common stock of the Issuer immediately prior to
the time of such exercise. The Option may only be exercised upon the happening
of certain events, none of which has occurred as of the date hereof. Prior to
such exercise, Morgan Stanley expressly disclaims beneficial ownership of the
shares of common stock of the Issuer which are purchasable by Morgan Stanley
upon exercise of the Option.
The number of shares indicated represents approximately
19.9% of the total outstanding shares of common stock of the Issuer as of
January 31, 1997, excluding shares issuable upon exercise of the Option, as
represented by the Issuer in the Agreement and Plan of Merger dated as of
February 4, 1997 between the Issuer and Morgan Stanley.
2 Does not include 1,385,706 shares of common stock of the
Issuer held by Morgan Stanley Asset Management Inc. ("MSAM"), a wholly-owned
subsidiary of Morgan Stanley, and its affiliates in discretionary accounts for
clients or their own proprietary accounts. MSAM's investment and/or voting
discretion with respect to shares held in such accounts is disclosed in the Form
13F filed by Morgan Stanley and MSAM for the quarter ended December 31, 1996.
3 Adjusted to reflect the issuance by the Issuer of 63,922,570
shares of common stock of the Issuer upon exercise of the Option as described
herein.
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Item 1. Security and Issuer
This Schedule 13D relates to the common stock, par value $0.01 per
share (the "Common Stock," an individual share of which is a "Share"), of Dean
Witter, Discover & Co., a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at Two World Trade Center, New York,
New York 10048.
Item 2. Identity and Background
This Schedule 13D is filed by Morgan Stanley Group Inc. ("Morgan
Stanley"), a Delaware corporation. Morgan Stanley is a holding company that,
through its subsidiaries, provides a wide range of financial services on a
global basis. Its businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; asset management; merchant banking
and other principal investment activities; brokerage and research services; the
trading of foreign exchange and commodities as well as derivatives on a broad
range of asset categories, rates and indices; and global custody, securities
clearance services and securities lending. These services are provided to a
large and diversified group of clients and customers, including corporations,
governments, financial institutions and individual investors. Morgan Stanley's
principal offices are located at 1585 Broadway, New York, New York 10036.
During the last five years, to the best of Morgan Stanley's knowledge,
neither Morgan Stanley nor any of its executive officers or directors has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction resulting in a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violation with respect to such laws.
All but one of the executive officers and directors of Morgan Stanley
are citizens of the United States. One executive officer and director of Morgan
Stanley is a citizen of the United Kingdom. The name, business address and
present principal occupation (including the name and address of the corporation
or organization in which such employment is conducted) of each executive officer
and director of Morgan Stanley is set forth in Schedule A to this Schedule 13D
and is specifically incorporated herein by reference in its entirety.
Item 3. Source and Amount of Funds or Other Consideration
This Statement relates to an option granted to Morgan Stanley by the
Issuer to purchase shares of Common Stock from the Issuer as described in Item 4
below (the "Option"). The Option entitles Morgan Stanley to purchase up to
63,922,570 Shares (the "Option Shares") under the circumstances specified in the
Stock Option Agreement dated as of February 4, 1997 between Morgan Stanley and
the Issuer (the "Stock Option Agreement") and as described in Item 4 below for a
purchase price of $38.125 per Share (the "Purchase Price"). The number of Option
Shares will be adjusted if necessary so that the number of Shares purchasable by
Morgan Stanley upon exercise of the Option is equal to 19.9% of the
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total outstanding Shares of common stock of the Issuer immediately prior to the
time of such exercise. Reference is hereby made to the Stock Option Agreement,
which is included as Exhibit 10.1 to the current report on Form 8-K of Morgan
Stanley dated February 4, 1997 (the "Form 8-K"), for the full text of its terms,
including the conditions upon which it may be exercised. The Stock Option
Agreement is incorporated herein by reference in its entirety.
The Option was granted by the Issuer as an inducement to Morgan Stanley
to enter into the Agreement and Plan of Merger dated as of February 4, 1997
between Morgan Stanley and the Issuer (the "Merger Agreement"). Pursuant to the
Merger Agreement and subject to the terms and conditions set forth therein
(including approval by the stockholders of Morgan Stanley and the Issuer and
various regulatory agencies), Morgan Stanley will merge with and into the Issuer
(the "Merger"), with the Issuer continuing as the surviving corporation (the
"Surviving Corporation"), and each issued and outstanding share of common stock
of Morgan Stanley, par value $1.00 per share, generally other than those shares
owned by Morgan Stanley or the Issuer, will be converted into the right to
receive 1.65 Shares. If the Merger is consummated in accordance with the terms
of the Merger Agreement, the Option will not be exercised. No monetary
consideration was paid by Morgan Stanley to the Issuer for the Option.
If Morgan Stanley elects to exercise the Option, it currently
anticipates that the funds needed to pay the Purchase Price will be generated by
a combination of available working capital, bank or other borrowings and/or the
sale, in whole or in part, of Option Shares following such exercise.
Item 4. Purpose of Transaction
As stated above, the Option was granted to Morgan Stanley in connection
with the execution of the Merger Agreement. As an inducement to the Issuer to
enter into the Merger Agreement, Morgan Stanley granted to the Issuer a
reciprocal option to purchase up to 31,506,582 shares of Morgan Stanley common
stock, par value $1.00 per share (the "Morgan Stanley Common Stock"), under the
circumstances specified in the Stock Option Agreement dated as of February 4,
1997 between Morgan Stanley, as issuer, and the Issuer, as grantee, for a
purchase price of $62.906 per share (the "Morgan Stanley Stock Option
Agreement").
The Option shall become exercisable upon the occurrence of certain
events set forth in Section 2 of the Stock Option Agreement, none of which has
occurred at the time of this filing.
If the Merger is consummated in accordance with the terms of the Merger
Agreement, the Board of Directors of the Surviving Corporation shall consist of
14 members, seven of whom shall be designated by each of Morgan Stanley and the
Issuer, with the current President of Morgan Stanley and the current Chairman of
Morgan Stanley being designees of Morgan Stanley and the current Chairman and
Chief Executive Officer of the Issuer being a designee of the Issuer. The
current Chairman and Chief Executive Officer of
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the Issuer will be Chairman and Chief Executive Officer, and the current
President of Morgan Stanley will be President and Chief Operating Officer, of
the Surviving Corporation.
Morgan Stanley has the right to cause the Issuer to prepare and file up
to three registration statements under the Securities Act of 1933, as amended,
in order to permit the sale by Morgan Stanley of any Option Shares purchased
under the Option.
The descriptions herein of the Stock Option Agreement, the Morgan
Stanley Stock Option Agreement and the Merger Agreement are qualified in their
entirety by reference to such agreements, copies of which were filed as Exhibits
10.1, 10.2 and 2.1, respectively, to the Form 8-K, and which are specifically
incorporated herein by reference in their entirety.
Other than as described above, Morgan Stanley has no plans or proposals
which relate to, or may result in, any of the matters listed in Items 4(a)-(j)
of Schedule 13D (although Morgan Stanley reserves the right to develop such
plans).
Item 5. Interest in Securities of the Issuer
As a result of the issuance of the Option, Morgan Stanley may be deemed
to be the beneficial owner of 63,922,570 Shares, which would represent
approximately 16.6% of the Shares outstanding after exercise of the Option
(based on the number of Shares outstanding on January 31, 1997, as set forth in
the Merger Agreement). Morgan Stanley will have sole voting and dispositive
power with respect to such Shares.
The Option Shares described herein are subject to the Option, which is
not currently exercisable. Nothing herein shall be deemed to be an admission by
Morgan Stanley as to the beneficial ownership of any Shares, and, prior to
exercise of the Option, Morgan Stanley disclaims beneficial ownership of all
Option Shares.
Except as described herein, neither Morgan Stanley nor, to the best of
Morgan Stanley's knowledge, any other person referred to in Schedule A attached
hereto, beneficially owns or has acquired or disposed of any Shares of the
Issuer during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
From time to time, Morgan Stanley and/or its subsidiaries have, in the
usual course of business, performed investment banking services for the Issuer
and/or its subsidiaries, including acting as underwriter of the securities of,
and acting as a financial adviser to, the Issuer and/or its subsidiaries.
Except for the Merger Agreement and the Stock Option Agreement, and
except as described in the preceding paragraph, none of the persons named in
Item 2 has any contracts, arrangements, understandings or relationships (legal
or otherwise) with any persons with respect to any securities of the Issuer,
including, but not limited to, transfers or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
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Item 7. Materials to be Filed as Exhibits
Exhibit Description
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1 Stock Option Agreement dated as of February 4, 1997
between Dean Witter, Discover & Co., as Issuer, and Morgan
Stanley Group Inc., as Grantee (incorporated by reference
from Exhibit 10.1 to the Current Report on Form 8-K of
Morgan Stanley Group Inc. dated February 4, 1997 (the
"Form 8-K")).
2 Agreement and Plan of Merger dated as of February 4, 1997
between Dean Witter, Discover & Co. and Morgan Stanley
Group Inc. (incorporated by reference from Exhibit 2.1 to
the Form 8-K).
3 Stock Option Agreement dated as of February 4, 1997
between Morgan Stanley Group Inc., as Issuer, and Dean
Witter, Discover & Co., as Grantee (incorporated by
reference from Exhibit 10.2 to the Form 8-K).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete
and accurate.
February 14, 1997 MORGAN STANLEY GROUP INC.
By: /s/ Patricia A. Kurtz
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Name: Patricia A. Kurtz
Title: Assistant Secretary
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Schedule A
The name and principal occupation of each executive officer
and director of Morgan Stanley are set forth below. Unless otherwise noted, each
of these persons is a United States citizen. Unless otherwise noted, the
business address of each person set forth below is Morgan Stanley Group Inc.,
1585 Broadway, New York, New York 10036.
Name Principal Occupation
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Richard B. Fisher Chairman of the Board of Directors, Managing
Director and director of Morgan Stanley
John J. Mack President, Managing Director and director of
Morgan Stanley
Barton M. Biggs Managing Director and director of Morgan
Stanley
Peter F. Karches Managing Director and director of Morgan
Stanley
Sir David A. Walker* Managing Director and director of Morgan
Stanley and director and Executive Chairman of
Morgan Stanley Group (Europe) Plc
Robert P. Bauman Non-executive chairman of British Aerospace
PLC; Director of Morgan Stanley
Daniel B. Burke** Retired; Director of Morgan Stanley
S. Parker Gilbert Retired; Director of Morgan Stanley
Allen E. Murray*** Retired; Director of Morgan Stanley
Paul J. Rizzo Retired; Director of Morgan Stanley
Jonathan M. Clark General Counsel and Secretary of Morgan
Stanley.
Philip N. Duff Chief Financial Officer and Managing Director
of Morgan Stanley
Eileen K. Murray Treasurer and Chief Accounting Officer of
Morgan Stanley
* Sir David A. Walker is a citizen of the United Kingdom.
** Mr. Burke's business address is Capital Cities/ABC, Inc., 77 West 66th
Street, New York, New York.
*** Mr. Murray's business address is Mobil Corporation, 15 East 42nd
Street, 24th Floor, New York, New York.
