By PETER TRUELL FEB. Morgan Stanley saw Dean Witter as the perfect pipeline from Wall Street to Main Street. Morgan Stanley, which issues securities for some of the world's biggest companies, wanted to increase its access to millions of Americans who had been lured to the stock market in recent years.

With thousands of salespeople in many cities and towns, Dean Witter was just the ticket. For Dean Witter's customers, the merger could mean many new investment choices from Morgan Stanley's stock-and-bond factory, from new stock offerings that it manages for big corporations to the most exotic bonds from developing nations.

In a way, the merger would be as if Sears and Saks Fifth Avenue decided to join. Yesterday's announcement brought immediate speculation about other possible links in the securities and banking industry, which has undergone a shakeout in the last two years as companies have scrambled to come to grips with the globalization of financial markets.

Indeed, the shares of Paine Webber Inc. A spokesman for Paine Webber said yesterday that his company intended to remain independent. Similarly, the shares of A. Edwards, the big brokerage firm based in St. Louis that has a network of offices across the country, also rose strongly yesterday, in part because of rumors that it might be bought by a big Midwestern bank.

MS Stock Price - Morgan Stanley Stock Quote (U.S.: NYSE) - MarketWatch

Nelkin, an analyst with Furman Selz Inc. Financial marriages, though, are easier contemplated than consummated. For example, Citicorp and American Express discussed a merger late last year and then discarded the idea. But a few big mutual fund companies, like the FMR Corporation's Fidelity Investments, still control more assets than even the largest securities firm.

Merrill, which has long dominated the American securities industry both on Wall Street and Main Street, reacted to the merger agreement yesterday with sang-froid.

They are two fine firms and we wish them well.

Dean Witter Reynolds - Wikipedia

To achieve the combination, which is expected to be completed in mid, Dean Witter will make a tax-free exchange of 1. The deal was reported by The Wall Street Journal yesterday. View all New York Times newsletters.

Fisher, Morgan Stanley's chairman, said at a news conference in midtown Manhattan yesterday. Fisher will become chairman of the executive committee of the new firm's board of 14 directors, half drawn from Dean Witter and half from Morgan Stanley. Purcell, Dean Witter's top executive, will become chairman and chief executive of the combined company. Mack, now Morgan Stanley's president. Morgan Stanley and Dean Witter had discussed working together intermittently during the last three years, the firm's top executives said yesterday, and had even considered possible joint ventures in The logic, these executives said, was obvious.

There had been another fruitless search for a partner. Three years ago, Morgan Stanley discussed and then dropped a possible merger with S. A key stumbling block in the proposed Warburg merger was the large degree of overlap between the two firms, which would have dictated big layoffs. Fisher said there would be only minimal layoffs from this new combination, insisting that the two firms complemented each other's activities and indeed would in some ways continue to be run as distinct businesses.

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But the merged firm, with its wide range of businesses, may have a more stable stream of earnings than either of the two firms separately. If Morgan Stanley's more volatile capital markets businesses are in the dumps, for instance, Dean Witter's more humdrum mutual fund and Discover credit-card operations should continue to produce steady revenues.

There have been close connections between Morgan and Dean Witter for a long time. Purcell and Thomas C. Schneider, Dean Witter's executive vice president and chief financial officer, had known Mr. Fisher for 20 years. Moreover, Morgan Stanley helped take Dean Witter public in June , and also advised Sears when it reorganized and spun off the brokerage firm. Detailed discussions between Mr.

Purcell began last summer, but it was only in recent weeks that it became clear that a merger would probably result, executives said yesterday. Both senior managements saw such combinations as Nationsbank's takeover of Boatmen's Bancshares, and even Salomon Brothers Inc. The merger was clinched by the signing of a definitive agreement earlier this week.

The new combination, however, holds risks for both firms and for their clients and shareholders. Mergers of equals are notoriously difficult to carry out, and often one partner emerges as the dominant force, as the managment team at Chemical Banking has done in its merger with the Chase Manhattan Bank.

Morgan Stanley and Dean Witter called meetings for today to get the merger moving as quickly as possible. The people at the top of financial services firms, and particularly on Wall Street, are well-known for their powerful egos and ruthless plays for management power and huge financial compensation.

This often makes smooth cooperation among senior executives difficult. At yesterday's news conference, Mr. Purcell sat sandwiched between Mr. Mack, both of whom have proved themselves adept board-room politicians at Morgan. Morgan Stanley was formed in out of the bond department of the House of Morgan after the passage of the Glass-Steagall Act that separated the securities and banking businesses in reaction to the Wall Street Crash and the ensuing worldwide depression.

It has always prided itself on its blue-blood heritage. Its annual report to shareholders trumpeted the principle that J. But Sears eventually decided to shed the financial businesses. Tell us what you think. Please upgrade your browser.

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