John Mack may be banking on Wachovia to keep Morgan Stanley afloat. The company, which owns Morgan Stanley Investment Management and Van Kampen Investments has officially entered into merger talks with Wachovia, CNBC's Charlie Gasparino reports Thursday morning. Morgan Stanley on Wednesday was said to have received the first call form Wachovia expressing interest mere hours after it was reported that Mack was open to the option.

If talks led to a deal, Wachovia would have to take on the task of integrating its Evergreen Investments unit with Van Kampen, Morgan's retail fund arm and MSIM, Morgan's institutional fund arm.

Evergreen is already a large firm in terms of assets, with $245 billion in AUM as of June 30 2008. Adding in the assets of Van Kampen with $138 billion AUM as of May 31, 2008 and MSIM with $605 billion in assets under management or supervision as of May 31, 2008, would almost triple the firm's AUM.

Other options that Mack has reportedly been exploring is a cash infusion from China's sovereign wealth fund and a deal with Citigroup. The New York Times reports that Mack rung up Citigroup CEO Vikram Pandit on Tuesday night and told him: "We need a merger partner or we’re not going to make it." The Times reports that Pandit turned Mack down flat.  

Edited by: Erin Kello


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