Movers: Citigroup, Morgan Stanley, Nortel, Under Armour, Bunge
Citigroup (C) and Morgan Stanley (MS) reach definitive agreement to combine MS's Global Wealth Management Group and Citi's Smith Barney, Quilter in the UK, and Smith Barney Australia into a new joint venture to be called Morgan Stanley Smith Barney. Citi will hold a 49% stake in the joint ventire and get upfront cash payment of $2.7 billion. MS will hold 51% stake in joint ventire After three years, the companies will have various purchase and sale rights for the joint venture, but Citi will continue to own a significant stake in the joint ventire at least through year five. S&P keeps buy on MS and hold on Citi. WSJ reports Citi will also announce steps to shed two consumer-finance units, private-label credit-card business, and scale back trading the company does on its own behalf. Oppenheimer rates Citi underperform.
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