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Brokerage to spin off credit card division

NEW YORK -- After a day of speculation that Morgan Stanley was planning to sell its slow growing Discover Card division, the company said yesterday its board instead had voted to spin off the unit to existing shareholders.

But analysts said the move by embattled Morgan Stanley chairman and chief executive Philip Purcell and his fellow board members could still be trumped if a bidding war for Discover emerges, and some said the entire company could be on the block.

Shares of the Wall Street brokerage house, which gained more than 2.5 percent on media reports of the potential Discover sale during regular trading, rose another 1.5 percent to $59.15 in after-hours trading after the disclosure.

Also yesterday, dissident shareholders and former executives of Morgan Stanley stepped up a letter-writing campaign and called for the removal of Purcell in a full-page newspaper ad.

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