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FBN’s Charlie Gasparino on the expected valuation of Citigroup’s Smith Barney sale to Morgan Stanley and its impact on investors.
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-- -- -- -- During the height of the financial crisis -- what 20082009.
Citi equity 2008.
Some are calling early 2000 when you look at the market 2000 -- but 2008 the height of the panic Lehman Brothers imploding.
Citigroup agreed to sell its brokerage business to Morgan Stanley in a very complex deal.
That would take several years to complete.
And guess what.
They are still had during haggling over the price for years later though apparently that is likely to come to an end -- This after America we actually have a point on the clocked her arm and I think if the -- -- -- afternoon.
The closing bell named after the show by the way for the show named after the closing bell though after the -- it's 4 PM houses countdown so I'll.
Whenever I'm just some half asleep when I'm on these shows that it.
I after the closing bell.
Will get the word from Wasserstein Perella Joseph Perot and former Morgan Stanley had investment -- big guy Morissette and now his -- firm.
Good friend of mine I should point out he's gonna come out with the valuation.
This is a pretty contentious issues one of those sort of behind the scenes stories -- you -- you like -- Wall Street so much okay.
Morgan Stanley says the price should be lower for obvious reasons it's still has to buy the rest of it.
Citigroup says it should be higher for obvious reasons -- -- to -- the -- of it.
They're at each other's throats on the on the sale this brokerage division -- -- when the biggest brokerage divisions and world.
When this thing is completed -- stay in the left totally -- -- control something like 181000 brokers far surpassing anybody else Merrill Lynch included.
We're gonna find out exactly what the price -- going to be for the sale which occurred was launched in 2008.
That's gonna come -- what's gonna happen I think they're gonna split the difference I think this is gonna be like right down the middle of the road.
You know it's not what Morgan Stanley says is totally is not what it was -- citi's totally we're gonna split the difference.
Which is probably why -- hire an arbitrage and are no I don't arbitrators which essentially would -- prelate is.
I should point out that if something surprise us and here's an interesting.
If you're playing the stocks and I you know I don't play stocks.
We our viewers theoretically invest in stocks.
You know there's an interest in what if you think.
You if you have a good indication that Morgan Stanley is gonna come out a little bit ahead of this.
You know you might wanna start buying shares you might see its -- to Morrison's -- the stock conversely if it's a little if -- she needs a little against -- looks like you have to take a bigger hit.
And already announced.
Man I don't know how much if Citigroup goes down and -- that's an -- -- -- Morgan Stanley.
You know it's I think you sell the stock -- -- -- -- -- -- this could have there's there's a trade into implicated -- -- you can't -- it.
The way these these charts -- moving nobody is price in this and I guess they're just pricing split the difference but that's how I would play this this thing if you have any -- my best guess.
Just leave it alone it's going to be split right down the middle when you look at Citigroup stock this.
Is just people are waiting for this thing to get back up well to the reverse split you understand topics -- you understand something called dilution.
When we talk about and when we talk about companies like Knight capital.
What makes Knight capital such.
Crappy stock right now well guess what it's going to be stuck at three -- a share.
If not forever because you know -- when they brought in the new investors to recapitalize today after that trading glitch blew up the firm.
That the way they structured the deal is that there's a lot more stock outstanding this is a convertible deal.
And elicited a fox does network right before that deal we pointed it out -- skills are not good and the stocks are rising to four dollar should stay away from it it's actually.
Fairly priced at three and it's -- debt and what is stock.
I'm so I I -- these you know movies you know I hate to say -- -- Citigroup same thing.
Massive dilution coming out of the financial crisis in order to -- that dilution you really have to.
Sell more parts of the firm you really have to kind of basically show much more earnings potential when they have right now and they don't and -- getting rid.
Of the brokerage division which they had to do at the time they need to to get capital they had become smaller.
That does not help the bottom line.
So why buy the stock and it -- from -- it's it's a zombie bank well.
Kind of fighting that's what they do like to get the CEO of of my capitol lawn at some point any deal there I.
I don't think Tom Joyce wants to be interviewed -- -- I'll tell you life and it comes down to this I will.
Drill down really hard on the following question you took a deal right they got all these new these new investors you took that deal.
Which may been good for you -- job okay.
You kept your job you sold the company to your to your teaching your customers.
You know people that supply you or even if that you're their -- -- supply -- would order flow.
That may be good but what's it good for the shareholders did you turn down -- -- -- I don't always know the shareholder -- got.
Five dolls or if you look at the what that's intraday -- beltway as it doesn't help anybody -- that does I don't -- the that's the bit to sixty and it intraday that's horrible habit.
If you saw the one.
I'll just telling you.
If he turned down a deal for five -- a share which may be the guy in Chicago Citadel was offering.
You know is that right did you for -- -- it is your responsibility.
