Will Morgan Stanley buy out Citigroup's 49 percent stake in their Morgan Stanley Smith Barney joint venture, and if so, when? David Reilly of Wall Street Journal takes a look at the different factors weighing on Morgan Stanley chief James Gorman and Citi chief Vikram Pandit.

When Citi and Morgan Stanley sealed the $2.7-billion deal to create the giant joint venture wirehouse three years ago, they specifically noted that "Citi will continue to own a significant stake in the joint venture at least through year five," i.e. 2014 [see MFWire.com, 1/13/2009]. Eight months later Pandit reportedly said that he "anticipates" Morgan Stanley completely taking over MSSB [see MFWire.com, 9/17/2009], and 14 months after that Gorman discounted a story claiming that Morgan Stanley might delay buying up more of MSSB [see MFWire.com, 11/9/2010].

The WSJ reports that Citi values MSSB at $20 billion while Morgan puts the joint venture's worth at between $14 billion and $16 billion. The paper concludes "Mr. Gorman has the better hand" and "should wait for Mr. Pandit to give ground on price." 

Edited by: Neil Anderson, Managing Editor


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