Morgan Stanley struck a deal with Citigroup Inc. on September 11 to take full control of Morgan Stanley Smith Barney by June 1, 2015. The agreement places a value of $13.5 billion on the joint venture that the two banks formed in January 2009, when Morgan Stanley paid $2.7 billion for a 51 percent stake in the entity. The two companies sparred over the division’s value, with Morgan Stanley claiming the unit was worth a little more than $9 billion, while Citi assessed its value at $22 billion. But Perella Weinberg Partners came up with an appraisal of less than $13.5 billion that helped bring the two sides to a resolution.
Unwinding the joint venture will help Citigroup strengthen its capital base and further Morgan Stanley CEO James Gorman’s desire to expand his company’s presence in retail brokerage, a business he ran both at Morgan Stanley and at Merrill Lynch & Co. Inc., his previous employer.
