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BREAKING NEWS FROM CNBC’S KATE KELLY: MORGAN STANLEY IN ADVANCED TALKS WITH SOVEREIGN WEALTH FUND OVER COMMODITIES UNIT

Jennifer Dauble
Friday, 20 Jul 2012 | 12:27 PM ET

WHEN: TODAY, FRIDAY, JULY 20TH

WHERE: CNBC’S “SQUAWK ON THE STREET

Following is the unofficial transcript of breaking news from CNBC’s Kate Kelly. All references must be sourced to CNBC.

Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000104334&play=1.

KATE KELLY: SO MORGAN STANLEY IS IN ADVANCED TALKS WITH A SOVEREIGN WEALTH FUND THE QATAR INVESTMENT AUTHORITY ABOUT THE POSSIBILITY OF THE QATAR’S INVESTING IN A SIGNIFICANT WAY IN MORGAN STANLEY’S COMMODITIES UNIT. YOU MAY REMEMBER THIS STORY FROM A MONTH OR TWO AGO ON OUR AIR I REPORTED THAT MORGAN STANLEY WAS TALKING TO A COUPLE OF POSSIBLE SUITORS ABOUT A MINORITY STAKE INCLUDING AT ONE POINT BLACKSTONE GROUP. I AM TOLD THAT THINGS HAVE MOVED ALONG TO THE POINT WHERE THEY’RE AT A PRETTY LATE STAGE OF NEGOTIATING WITH THE QIA OVER THE POSSIBILITY OF A MINORITY STAKE WITH THEM. IT IS UNCLEAR WHAT THE EXACT TERMS ARE ALTHOUGH SUCH A STAKE COULD CONCEIVABLY COST A BILLION DOLLARS OR MORE. IN BETTER YEARS THE MORGAN STANLEY COMMODITIES DIVISION HAS GENERATED $2 TO $3 BILLION IN REVENUE I AM TOLD AND ALSO INCLUDES SOME MAJOR PHYSICAL ASSETS INCLUDING AN OIL LOGISTICS BUSINESS CALLED TRANSMOUNTAIN AS WELL AS A 49% STAKE IN SHIPPING BUSINESS CALLED HEIDMAR. IT’S BEEN A TURBULENT TIME FOR A LOT OF COMMODITIES TRADERS ESPECIALLY THE FIRST HALF OF THIS YEAR WITH CRUDE OIL BEING ON SUCH A WILD RIDE AND I’M TOLD THE SECOND QUARTER FOR MORGAN WHICH WAS DIFFICULT IN A LOT OF ARENAS INCLUDING FIXED INCOME AND INVESTMENT BANKING. FIXED INCOME OF COURSE HOUSING THE COMMODITIES UNIT WAS A TOUGH ONE AND NOT TERRIBLY PROFITABLE RELATIVE TO THE PAST. BUT IT IS STILL A STRONG BUSINESS AND ONE THAT MORGAN CFO RUTH PORAT SAID AS RECENTLY AS YESTERDAY WE CONSIDER TO BE AN ONGOING BUSINESS ONE THAT WE LIKE VERY MUCH ALTHOUGH SHE DID SAY TO US IN AN INTERVIEW NEVER SAY NEVER IN TERMS OF DEALS THAT MIGHT BE DONE. SO THEY’RE NOT COMMENTING ON THE DETAILS OF THIS PURPORTED DEAL TODAY BUT I AM TOLD BY SOURCES THAT SOMETHING COULD BE QUITE CLOSE MAYBE WITHIN THE COMING DAYS IN TERMS OF AN ANNOUNCEMENT CARL OF THIS QIA MORGAN JOINT VENTURE.

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