Discover to Go Public In Spinoff from Morgan Stanley
By Justin McHenry
Along with its earnings release last week, investment banking firm Morgan Stanley announced that its Discover unit would be spun off into its own public company. With the spinoff to be completed by the third quarter of 2007, all four of the major credit card companies–Visa, MasterCard, American Express and Discover–will be open to public investors by the end of next year. American Express has long been a public company, MasterCard had its IPO this year and now Visa and Discover will follow suit in 2007. (Technically, Discover was already part of a public company in Morgan Stanley, but the spinoff will allow investors to buy into just the credit card business.)
Morgan Stanley CEO John Mack had committed to Discover as a part of the firm upon taking the top job in 2005, but says with Morgan Stanley back on firmer footing, the spinoff offers better shareholder value than is possible by keeping Discover in the fold.