Morgan Stanley

Morgan Stanley Completes Acquisition of Saxon Capital

Dec 4, 2006

New York —


Morgan Stanley (NYSE: MS) announced today that it has completed the acquisition of Saxon Capital, Inc. (NYSE: SAX), a premier servicer and originator of residential mortgages.  Under the terms of the agreement, Saxon shareholders will receive $14.10 in cash, less applicable withholding taxes, for each share of common stock owned at the effective date of the merger.  In August 2006, Morgan Stanley announced its intention to acquire Saxon for approximately $706 million in cash, and Saxon’s shareholders approved the merger in October 2006.

“This acquisition is another important step in our long-term strategy of building a global, vertically integrated residential mortgage business,” said Anthony Tufariello, Global Head of Morgan Stanley’s Securitized Products Group.  “Saxon adds a premier servicing operation with a scalable U.S. origination platform to our substantial existing residential mortgage franchise.

As a result of the transaction, Saxon will cease to be publicly traded and, accordingly, will no longer be listed on the New York Stock Exchange.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management, wealth management and credit services.  The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 30 countries.  For further information about Morgan Stanley, please visit

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Forward-Looking Statements

Statements about the expected effects of the acquisition and all other statements in this release, other than historical facts, constitute forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect current estimates, projections and expectations. In making any such statements, Morgan Stanley believes that its expectations are based on reasonable assumptions. However, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected or anticipated. These forward-looking statements are subject to numerous risks and uncertainties. There are various important factors that could cause actual results to differ materially from those in any such forward-looking statements, many of which are beyond the control of Morgan Stanley, including: the risks associated with business combinations, the impact of general economic conditions in regions in which Morgan Stanley and Saxon currently conduct business, industry conditions (including competition, fluctuations in interest rates and residential and commercial real estate values), capital expenditure requirements, legislative or regulatory requirements, changes in the tax laws and access to capital markets. The actual results or performance by Morgan Stanley could differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Morgan Stanley. For a discussion of additional risks and uncertainties that may affect the future results of Morgan Stanley's Institutional Securities business segment, which includes the Securitized Products Group, please see "Forward-Looking Statements" immediately preceding Part I, Item 1, "Competition" and "Regulation" in Part I, Item 1, "Risk Factors" in Part I, Item 1A and "Certain Factors Affecting Results of Operations" in Part II, Item 7 of Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended November 30, 2005, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Morgan Stanley's 2006 Quarterly Reports on Form 10-Q and in other items throughout the Form 10-K, Forms 10-Q and the Morgan Stanley's 2006 Current Reports on Form 8-K.

Contact: Media Relations, Mark Lake, 212.761.0814