Summary
Morgan Stanley announced on June 21, 2013, that it had secured all necessary regulatory approvals to acquire the remaining 35% stake in Morgan Stanley Smith Barney Holdings LLC (MSSBH) from Citigroup Inc. This acquisition, anticipated to close around June 28, 2013, will be conducted through exercising a call right and involves a cash payment of $4.725 billion. Concurrently, MSSBH will redeem Citigroup's Class A Preferred Interests for approximately $2.028 billion. The transaction will result in a negative adjustment to Morgan Stanley's capital (shareholders' equity) of approximately $200 million (net of tax), impacting earnings per share calculations for the periods ending June 30, 2013. This move signifies Morgan Stanley's complete ownership of its wealth management joint venture.
Key Highlights
- 1Morgan Stanley received all regulatory approvals to acquire the remaining 35% interest in MSSBH from Citigroup.
- 2The acquisition will be completed through the exercise of a 'Remaining Call Right' under the MSSBH LLC agreement.
- 3The transaction is expected to close on or about June 28, 2013.
- 4Morgan Stanley will pay $4.725 billion in cash for the remaining interest.
- 5MSSBH will also redeem Citigroup's Class A Preferred Interests for approximately $2.028 billion.
- 6A negative adjustment of approximately $200 million (net of tax) to shareholders' equity is anticipated.
- 7The negative capital adjustment will impact basic and fully diluted EPS calculations for Q2 2013.