Morgan Stanley and Citigroup have reached an agreement, in accordance with which the former will acquire Citi’s 14% stake in Morgan Stanley Smith Barney (MSSB) along with transfer of nearly $5.5bn of deposits at no premium.
The 100% valuation of MSSB has been decided at $13.5bn, which is subject to concerned regulatory approval.
In addition to the above agreement, both parties have embarked an agreement to purchase Citi’s remaining 35% stake in MSSB, inclusive of related deposits of nearly $48bn, no later than 1 June 2015 at the same implied $13.5bn valuation.
Morgan has agreed to acquire the next 15% stake in MSSB from Citi by 1 June 2013, pending regulatory approval.
Morgan Stanley chairman and chief executive officer James Gorman said, "This mutually beneficial agreement gives both parties certainty and transparency on price and timing, and is a significant milestone for Morgan Stanley in the implementation of our strategy."
Citi chief executive officer Vikram Pandit said, "Since forming Citi Holdings, we have reduced its assets by over $600 billion, and we will continue to do so in an economically rational manner."
Morgan Stanley offers a range of investment banking, securities, investment management and wealth management services and trades in 43 geographies across the globe.
Citi serves nearly 200 million customer accounts and does business in more than 160 nations by offering consumers, corporations, governments and institutions with an array of financial products and services.