Morgan Stanley is in talks to take over Citigroup's Smith Barney brokerage division, according to a person familiar with the situation, a sister publication, On Wall Street, reported Friday.

Morgan Stanley intends to initially buy a 51% stake in Smith Barney and increase that stake in years to come, according to the source. Morgan will eventually obtain full ownership of Smith Barney. A retention package for brokers is almost certain to be modeled after the deal offered by Bank of America to Merrill Lynch's brokerage force in that takeover.

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