Morgan Stanley (NYSE:MS) to acquire stake of Morgan Stanley Smith Barney Holdings LLC.
Morgan Stanley (NYSE:MS) has announced that the company will go ahead and acquire from Citigroup Inc., the remaining 35 percent interest in Morgan Stanley Smith Barney Holdings LLC. The company has received all regulatory approvals fulfilling a key strategic priority. Upon the close of this acquisition, Morgan Stanley will own 100 percent of the business, which will operate under the name Morgan Stanley Wealth Management.
Morgan Stanley will notify Citigroup, that it intends to exercise its rights for the remaining interest of 35 percent by purchasing it at a previously established price of $4.7 billion which will be paid in cash. The acquisition is expected to close down somewhere at the end of June, 2013. Morgan Stanley has to record a negative adjustment to Shareholder’s Equity of approximately $200 million to give effect to the difference between the carrying value and the purchase price for the 35 percent redeemable non-controlling interest. This adjustment will have a negative impact on the calculations of Basic and Diluted earnings per share for the three month and six month quarter ending.
MSSBH will redeem all of its Class A Preferred Interests owned by Citigroup and its affiliates amounting to $2.028 million which is additional to the amount paid for acquisition of 35 percent interest.
James P. Gorman, Chairman and Chief Executive Officer of Morgan Stanley said that a multi-year effort has transformed to a culmination where the company’s business model will offer stronger shareholder returns and greater stability in volatile markets.
Morgan Stanley’s a premier investment banker and one of the world’s preeminent wealth and asset management franchises now more powerful and stronger. Having achieved this milestone, the company is committed and determined to provider higher returns to its shareholder’s. Morgan Stanley is a leading global financial services firm which provides a wide range of investment banking and management, and wealth management services.
The stock of the company soared 2.05% and closed at $24.40 for the previous day’s trading session.