SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
MORGAN STANLEY GROUP INC.
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(Name of Issuer)
Common Stock, Par Value $1.00 Per Share
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(Title of Class of Securities)
617446 10 9
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(CUSIP Number)
Christine A. Edwards
Executive Vice President and General Counsel
Dean Witter, Discover & Co.
Two World Trade Center
66th Floor
New York, New York 10048
(212) 392-2222
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
February 4, 1997
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(Date of Event Which Requires Filing of this Statement)
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 [ ].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
(Continued on following pages)
(Page 1 of 9 Pages)
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CUSIP No. 617446 10 9 13D Page _2_ of _9_ Pages
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1 NAME OF REPORTING PERSON
Dean Witter, Discover & Co.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
36-3145972
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS *
WC, BK, OO
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5 CHECK BOX 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
SHARES 31,506,582 (1, 2)
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH None
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 31,506,582 (1, 2)
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10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,506,582 (1, 2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES * [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6% (2, 3)
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14 TYPE OF REPORTING PERSON *
HC; CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE>
1 The shares of common stock of Morgan Stanley Group Inc. (the
"Issuer") covered by this report are purchasable by Dean Witter,
Discover & Co. ("DWD") upon exercise of an option (the "Option")
granted to DWD pursuant to the Stock Option Agreement dated as of
February 4, 1997 between Issuer and DWD (the "Stock Option
Agreement"), and described in Item 4 of this report. Prior to the
exercise of the Option, DWD is not entitled to any rights as a
shareholder of the Issuer as to the shares covered by the Option.
The number of shares of common stock of the Issuer purchasable by
DWD under the Option, which is initially set to equal 31,506,582
shares, will be adjusted if necessary so that the number of
shares purchasable by DWD upon exercise of the Option at the time
of its exercise 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, DWD expressly disclaims
beneficial ownership of the shares of common stock of the Issuer
which are purchasable by DWD 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.
2 Does not include 893,800 shares of common stock of the Issuer
held in registered investment companies under the investment
discretion of Dean Witter InterCapital Inc. ("DWI"), a direct
wholly-owned subsidiary of DWD. DWI's investment discretion over
such 893,800 shares is disclosed in the Form 13F filed by DWD and
DWI for the quarter ended September 30, 1996.
3 Adjusted to reflect the issuance by the Issuer of 31,506,582
shares of common stock of the Issuer upon exercise of the Option
as described herein.
(Page 3 of 9 Pages)
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Item 1. Security and Issuer
This Schedule 13D relates to the common stock, par value $1.00
per share (the "Common Stock," an individual share of which is a
"Share"), of Morgan Stanley Group Inc., a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located
at 1585 Broadway, New York, New York 10036.
Item 2. Identity and Background
This Schedule 13D is filed by Dean Witter, Discover & Co.
("DWD"), a Delaware corporation that is a diversified financial
services organization providing a broad range of nationally marketed
credit and investment products, with a primary focus on individual
customers. DWD has three major businesses: full service brokerage,
asset management and credit services. DWD's principal offices are
located at Two World Trade Center, New York, New York 10048.
During the last five years, to the best of DWD's knowledge,
neither DWD 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 executive officers and directors of DWD are citizens of the
United States. 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 is set forth in Schedule A to this Schedule 13D
and is specifically incorporated herein by reference.
Item 3. Source and Amount of Funds or Other Consideration
This Statement relates to an option granted to DWD by the Issuer
to purchase shares of Common Stock from the Issuer as described in
Item 4 below (the "Option"). The Option entitles DWD to purchase
31,506,582 Shares (the "Option Shares") under the circumstances
specified in the Stock Option Agreement dated as of February 4, 1997,
between DWD and the Issuer (the "Stock Option Agreement") and as
described in Item 4 below, for a purchase price of $62.906 per Share
(the "Purchase Price"). The number of Option Shares will be adjusted
if necessary so that the number of shares purchasable by DWD upon
exercise of the Option at the time of its exercise is equal to 19.9%
of the 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 10.2
to the Current Report on Form 8-K filed by DWD on February 14, 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 DWD to
enter into the Agreement and Plan of Merger dated as of February 4,
1997, between DWD 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 DWD and the Issuer
and various regulatory agencies), the Issuer will merge with and into
DWD (the "Merger") with DWD continuing as the surviving corporation
(the
(Page 4 of 9 Pages)
<PAGE>
"Surviving Corporation"), and each issued and outstanding share
of common stock of the Issuer, par value $1.00 per share, generally
other than those shares owned by the Issuer or DWD, will be converted
into the right to receive 1.65 Shares. If the Merger is consummated,
the Option will not be exercised. No monetary consideration was paid
by DWD to the Issuer for the Option.
If DWD elects to exercise the Option, it currently anticipates
that the funds 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 DWD in connection with
the execution of the Merger Agreement. As an inducement to the Issuer
to enter into the Merger Agreement, DWD granted to the Issuer a
reciprocal option to purchase up to 63,922,570 shares of DWD common
stock, par value $.01 per share, under the circumstances specified in
the Stock Option Agreement dated as of February 4, 1997 between DWD,
as issuer, and the Issuer, as grantee, for a purchase price of $38.125
per share (the "DWD 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 fourteen members, seven of whom shall be designated
by each of DWD and the Issuer, with the current Chairman and Chief
Executive Officer of DWD being a designee of DWD and the current
President of the Issuer and the current Chairman of the Issuer being
designees of the Issuer. The current Chairman and Chief Executive
Officer of DWD will be Chairman and Chief Executive Officer, and the
current President of the Issuer will be President and Chief Operating
Officer, of the Surviving Corporation.
DWD 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 DWD of any Option Shares
purchased under the Option.
In the event the Merger is consummated, the Common Stock, the MS
Preferred Stock (as such term is defined in the Merger Agreement) and
the depositary shares and capital units representing shares of the MS
Preferred Stock will be delisted from the New York Stock Exchange and
any other exchange, and will become eligible for termination of
registration under the Act, as amended.
The descriptions herein of the Stock Option Agreement, the DWD
Stock Option Agreement and the Merger Agreement are qualified in their
entirety by reference to such agreements, copies of which were filed
as Exhibits 10.2, 10.1 and 2.1, respectively, to the Form 8-K and
which are incorporated herein by reference in their entirety.
(Page 5 of 9 Pages)
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Other than as described above, DWD 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 DWD reserves the right to develop
such plans).
Item 5. Interest in Securities of the Issuer
As a result of the issuance of the Option, DWD may be deemed to
be the beneficial owner of 31,506,582 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). DWD 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 DWD as to the beneficial ownership of any Shares,
and, prior to exercise of the Option, DWD disclaims beneficial
ownership of all Option Shares.
Except as described herein, neither DWD nor, to the best of DWD'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, the Issuer and/or its subsidiaries have, in
the usual course of business, performed investment banking services
for DWD and/or its subsidiaries, including acting as underwriter of
the securities of, and acting as financial advisor to, DWD 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.
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 Morgan Stanley Group Inc., as Issuer, and Dean
Witter, Discover & Co., as Grantee (incorporated by
reference to Exhibit 10.2 to the Current Report on Form
8-K of Dean Witter, Discover & Co. on February 14, 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 Dean Witter, Discover & Co., as Issuer, and
Morgan Stanley Group Inc., as Grantee (incorporated by
reference to Exhibit 10.1 to the Form 8-K).
(Page 6 of 9 Pages)
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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 DEAN WITTER, DISCOVER & CO.
by /s/ Ronald T. Carman
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Name: Ronald T. Carman
Title: Senior Vice President and
Associate General Counsel
(Page 7 of 9 Pages)
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SCHEDULE A
Names of Directors and Principal Occupation Residence or Business
Officers or Employment Address of Organization
- ---------------------- -------------------- -----------------------
Philip J. Purcell Chairman and Chief Dean Witter, Discover &
Director and Officer Executive Officer Co. ("DWD")
Two World Trade Center
New York, NY 10048
Edward A. Brennan Retired 400 North Michigan Avenue
Director Suite 400
Chicago, IL 60611
Alfred C. DeCrane, Jr. Retired Two Greenwich Plaza
Director Suite 300
P.O. Box 1247
Greenwich, CT 06836
Robert M. Gardiner Senior Advisor to DWD DWD
Director Two World Trade Center
New York, NY 10048
Nancy Kassebaum Retired 801 Pennsylvania Avenue,
Baker United States Senator NW
Director Washington, DC 20004
C. Robert Kidder Chairman and Chief Borden Inc.
Director Executive Officer, 180 East Broad Street
Borden Inc. Columbus, OH 43215
Miles L. Marsh Chairman and Chief James River Corporation
Director Executive Officer, 800 Connecticut Avenue
James River Riverpark
Corporation Norwalk, CT 06856
Michael A. Miles Retired 1350 Lake Road
Director Lake Forest, IL 60045
Sybil C. Mobley Dean of the School Florida A&M University
Director of Business and 1500 Wahnish Way
Industry, Florida Tallahasee, FL 32307
A&M University
Clarence B. Rogers, Jr. Chairman of the Equifax, Inc.
Director Board, Equifax, Inc. 1600 Peachtree Street, NW
Atlanta, GA 30309
(Page 8 of 9 Pages)
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Names of Directors and Principal Occupation Residence or Business
Officers or Employment Address of Organization
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Thomas R. Butler President, NOVUS DWD
Officer Services, and Two World Trade Center
Executive Vice New York, NY 10048
President
Richard M. DeMartini President, Dean DWD
Officer Witter Capital, and Two World Trade Center
Executive Vice New York, NY 10048
President
James F. Higgins President, Dean DWD
Officer Witter Financial, Two World Trade Center
and Executive Vice New York, NY 10048
President
Stephen R. Miller President and Chief DWD Electronic Financial
Officer Operating Officer, Services Inc.
DWD Electronic 101 California Street
Financial Services San Francisco, CA 94111
Inc., and Executive
Vice President
Mitchell M. Merin Executive Vice DWD
Officer President and Chief Two World Trade Center
Administrative New York, NY 10048
Officer
Thomas C. Schneider Executive Vice DWD
Officer President and Chief Two World Trade Center
Financial Officer New York, NY 10048
Christine A. Edwards Executive Vice DWD
Officer President, General Two World Trade Center
Counsel and New York, NY 10048
Secretary
(Page 9 of 9 Pages)
