Sept 11 (Reuters) - Morgan Stanley agreed to buy the rest of its brokerage joint venture from Citigroup Inc over time at a price that values the business at $13.5 billion, far lower than the $22 billion valuation for which Citigroup had originally hoped.
Under the terms of the agreement, Morgan Stanley will buy another 14 percent of Morgan Stanley Smith Barney now, and will buy the rest of Citigroup's remaining 35 percent stake by June 1, 2015. The deal is subject to regulatory approval.
The transaction removes a question mark from the two banks, which agreed to the joint venture in 2009 in the wake of the financial crisis. Morgan Stanley, the majority owner of the business, had always expected to buy Citigroup out, but it was unclear what price it would have to pay.
The two banks brought the matter to an independent arbitrator to decide on the value when they could not agree to a price on their own. But the decision announced on Tuesday was made by the two banks and not the arbitrator, Perella Weinberg Partners.