Deal Reports Boost Citigroup & Morgan Stanley (MS, C, AAPL, IPAS)

Deal Reports Boost Citigroup & Morgan Stanley (MS, C, AAPL, IPAS)

Shares of Citigroup Inc.(NYSE:C) and Morgan Stanley(NYSE:MS) are surging on reports that Morgan Stanley may boost its stake in Citigroup’s wealth management fund, which could value the deal at around $10 billion. As per reports from Reuters, Morgan Stanley, which currently holds 51% stake, could acquire additional 14% stake. It has options to buy the remaining portion in two more chunks through May 2014. Citigroup is recording its stake in Morgan Stanley Smith Barney at a $21 billion valuation in its balance sheet, while Morgan Stanley is carrying its stake at just below $20 billion valuation. Citigroup also has negotiating leverage stemming from the urgency Morgan Stanley is likely to feel to buy the remaining stake. The deal seems quite logical considering Citigroup is required to raise its capital after failing the recent stress test by the Federal reserve, which recorded Tier 1 capital ratio of 4.90%, shortfall of 0.10%.
Morgan Stanley considers as the strongest bank among the entire banking sector considering its solid capital ratio. The bank was the first one to announce dividend and buy back share after passing stress test comfortable recently.
Shares of Morgan Stanley are up over 4% to $20.37 and Citigroup rose about 0.70%.

Apple Inc.(NASDAQ:AAPL) is consolidating after showing solid rally recently following launch of its third and the upgraded version of the iPad, which sparked many large brokerage firms to raise their price target on the stock to as much as $710. Also, last week, the company announced a quarterly dividend of $2.65/share to begin in FQ4 of this year (July 2012) as well as a buyback program of up to $10 billion.
AAPL is the biggest outperformer for the current year with the stock surging over 47% and made an all time high of $609.65 on Wednesday and is the world’s biggest company by valuation (about $5560 billion).
iPass Inc.(NASDAQ:IPAS) shares made multi-year high this morning on reports that the company “could be up for sale.” iPass had a market cap of about $160 million, $25 million in cash, and no debt at the end of December, as per dealReporter.