Morgan Stanley, Citigroup agree Smith Barney price of $13.5 bn

12 Sep 2012

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After months of negotiations, US banking giants Morgan Stanley and Citigroup Inc have reached an agreement on the pricing of their joint venture brokerage firm Morgan Stanley Smith Barney Holdings LLC (MSSB) at $13.5 billion.

Morgan Stanley emerged winner in the deal over Citigroup, which considered the brokerage business was worth approximately $22 billion, while Morgan Staley's own valuation for the business was only around $9 billion.

At present, Morgan Stanley owns 51-per cent stake in MSSB with the Citigroup holding the remaining 49 per cent.

In a statement yesterday, Morgan Stanley said that it will purchase Citigroup's 14-per cent stake in MSSB, together with the transfer of approximately $5.5 billon of deposits at no premium. With the agreed valuation, the stake is worth $1.9 billion.

Further, both the banks have also reached an agreement with respect to Citi's remaining 35-per cent stake in MSSB inclusive of deposits of around $48 billion, no later than 1 June 2015, subject to regulatory approvals, at the same valuation of $13.5 billion.

It has been decided that Morgan Stanley will acquire the next 15-per cent stake in MSSB from Citi by 1 June 2013.

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