Morgan Stanley (MS) and Citigroup (C) said early Tuesday that they agreed on the valuation to be used in pricing Morgan Stanley’s purchase of an additional 14% stake in the Morgan Stanley Smith Barney joint venture: $13.5 billion for the business, which includes close to 17,000 advisors.
Morgan Stanley has agreed to acquire the next 15% stake in MSSB from Citi by June 1, 2013, subject to regulatory approval. In terms of the remaining 35% stake, this valuation would apply through June 1, 2015.
“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,” said Morgan Stanley Chairman and CEO James Gorman (left) in a press release.
For the past few months, Morgan Stanley and Citigroup disputed the value of the Morgan Stanley Smith Barney joint venture. Citigroup said the full value of MSSB was $22 billion, while Morgan Stanley says it was worth only $9 billion (though its SEC filings put the value closer to $12 billion).