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Smith Barney business merger can finally be completed

Many in New Jersey may remember that in January 2009, Smith Barney was owned by Citigroup. Morgan Stanley made a move to purchase a 49 percent interest in Smith Barney. Recently, Morgan Stanley was given the go ahead to proceed with purchasing the final 35 percent interest in Smith Barney to complete the business merger. Regulators had been waiting to determine whether Morgan Stanley afford the purchase.

The $4.7 billion purchase price will be paid in cash. This sale will give Morgan Stanley the opportunity to have a more steady income stream in case of hard times. In the past, it has had to rely on its trading business more than company executives would have liked.

At first, Morgan Stanley had made arrangements to purchase the remaining portion of the company in pieces over three years. However, in 2010, the company's CEO decided to stock up some cash in order to make sure Morgan Stanley was in compliance with the new Basel rules' capital ratios. Additionally, when the first installment would have been due last year, Citigroup and Morgan Stanley were unable to agree on a fair price.

Now, Morgan Stanley's patience has been rewarded as the business merger comes to fruition. New Jersey businesses that are looking to grow and acquire another business may benefit from seeking out advice and assistance with the planning and legalities associated with a business sale. It's not always as simple or as quick as it seems it ought to be, especially if one or both of the companies is publicly traded. Even private companies will have at least some contact with state agencies before a merger can be considered complete.

Source: Forbes, "The Moment Morgan Stanley's Been Waiting For, It Can Buy All Of Smith Barney," Halah Touryalai, June 21, 2013

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