Advisor-sold mutual fund shops, ownership for one of your key distribution partners is consolidating.
Suzanne Kapner and Aaron Lucchetti in the Wall Street Journal report
that, as expected, Morgan Stanley
CEO James Gorman
just had the investment bank shell out $1.89 billion to snap up another 14 percent of Morgan Stanley Smith Barney
Citi and Morgan Stanley revealed the deal
The deal boosts Morgan Stanley's MSSB stake to 65 percent and gives Gorman the option of buying the remaining 35 percent by June 1, 2015. Both the current deal and the 35 percent remaining value MSSB at the same combined price: $13.5 billion. That valuation is a blow to Citi: as recently as February, the same two WSJ
that the bank valued MSSB at $20 billion.
MSSB ended 2011 with $1.65 trillion in client assets. As of March 31, the wirehouse had 17,193
Former Merrill Lynch president Gregory Fleming
leads Morgan Stanley's wealth division, which MSSB. The wealth division had revenues of $13.4 billion and pretax margins of 10 percent (i.e. $1.34 billion) in 2011. According to the WSJ
, Gorman hopes to boost MSSB's margins to 20 percent.
Neil Anderson, Managing Editor
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