Morgan Stanley Sets Discover/PULSE Spin-Off

WALL STREET – Culminating in two years of stops and starts, Morgan Stanley reported Friday plans to spin-off its Discover operations, which includes the fourth-largest debit and credit card network. The deal comes just two years after Discover acquired PULSE, the electronic funds transfer network for 2,000 credit unions and an equal amount of banks, setting off conjecture about a Discover spin-off. Under the deal announced Friday, The spin-off will be conducted as a tax-free distribution of shares in the new company, to be known as Discover Financial Services, to Morgan Stanley shareholders. The spin-off comes the market for EFT companies is sizzling, with shares in MasterCard having tripled in value since last may’s IPO of the second largest financial network, and VISA USA is planning an IPO later this year. Discover has 50 million cardholders, putting it fourth behind Visa, MasterCard and American Express.