Boston, MA 06/20/2014 (wallstreetpr) – Morgan Stanley (NYSE:MS) won the antitrust approval from the U.S. regulator – the Federal Trade Commission (FTC), for its proposal to sale the Global Oil Me chanting unit to Russia’s OAO Rosneft. The unit involves in global oil storage, transportation of oil and refined products and oil trading.
Political Tension Delay The Approval Process
The FTC approved the process, but the deal still need the approval from the Committee on Foreign Investment in the U.S. (CFIUS). CFIUS is examining the deal for the national security concerns as the transaction happened between two foreign investors.
Both the companies need to wait until to resolve the political tension between the U.S. and Russia. CFIUS review last up to 75 days and the U.S. government imposed the sanction on Rosneft in April 2014, so, still time is there to get the approval. If both the countries settle down their political war, then, the approval process will not take much time as there are no physical assets such as pipelines associated with the deal.
Divesting The Oil Merchanting Unit
In December 2013, Morgan Stanley (NYSE:MS) agreed to sell the merchanting unit to Rosneft. The selling agreement includes global networks of oil storage, inventory, physical purchase, sale and supply; freight shipping contracts and equity investments. It does not include the oil trading business, TransMontaigne stake and commodities operation outside the oil sector.
In June 9, 2014, the Firm agreed to sell its stake in oil transportation company TransMontaigne to NGL Energy Partners LP. Both the transactions will not have a significant impact over the Firm’s financial results.
Going Forward
The rationale behind the transactions is that the Firm plans to divest the physical oil businesses to boost its returns from its trading unit and avoid the increasing regulatory involvement. Even, Morgan Stanley (NYSE:MS) CEO James Gorman said that the deal expects to complete in the third quarter of 2014.
