24/06/2013
Morgan Stanley buys up the remaining 35% of Smith Barney from Citigroup
P { margin-bottom: 0.08in; } The US bank Morgan Stanley on 21 June announced that it is planning to exercise its buy option for the remaining 35% it does not already control in its joint venture with its rival Citigroup, Morgan Stanley Smith Barney Wealth Management (MSSB).The transaction is expected to be completed by 28 June or a date soon thereafter, at a price which had previously been set at USD4.7bn in cash, a statement says. Once controlled entirely by Morgan Stanley, the entity will become known as Morgan Stanley Wealth Management.The operation will conclude a very long story which has long complicated relations between Morgan Stanley and Citi. Morgan Stanley Smith Barney was created in 2009, from the merger of financial product retail distribution activities at Morgan Stanley and activities at Citigroup which had been operating under the name Smith Barney.Morgan Stanley had made complete integration a priority, but the project ran into a series of divergences between the partners with respect to the value of the business. The two banks in September agreed on a total valuation of USD13.5bn. Morgan Stanley, which then held 51% of MSSB, exercised an initial buy option for an additional 14%. The remaining 35% were expected to be acquired by the end of June 2015.James Gorman, chairman and CEO of Morgan Stanley, claims in a statement that the operation represents “a historic day” for his group. “It’s the culmination of several years of effort to transform our business model into something that offers the best returns to shareholders and more stability on volatile markets,” he said.
