[ by Melanie Gretchen ]

Morgan Stanley will pay Citigroup an amount to be determined today, as the former increases its stake in their Morgan Stanley Smith Barney wealth-management venture.  Perella Weinberg Partners LP will determine how much 51%-owner Morgan Stanley will pay to expand its ownership of the unit in coming year, as Morgan Stanley exercises an option in June to buy a further 14% of the brokerage firm, bringing its stake to 65%.

Here's the skinny:

• Morgan Stanley valued the joint venture at $9 billion, arguing that the value of the brokerage business has suffered in part due to a weak economy
• Citi valued Smith Barney at $22 billion.
• Morgan Stanley higher-ups have reported difficulty with integrating its sales force with Citi’s over the past three years
• Nevertheless, CEO James Gorman is counting on the 17,000-strong brokerage business toward the long-term success of the entire company
• To this end, Morgan Stanley is looking to purchase the rest of the company over the next 2 years

For further details, go to [WSJ, 8/28/12] and [NY Post, 9/10/12].