"We have been assessing our options for the asset management business and have found, in Legg Mason, a partner with an excellent product set that both complements and enhances our existing product offering to our customers," says Citigroup CEO Charles Prince.

The deal does not include Citigroup's asset management business in Mexico, its retirement services business in Latin America or its interest in the CitiStreet joint venture. The pair entered into a three-year global agreement for Citigroup to continue offering its clients asset management's products and inherit Legg Mason Wood Walker's position as the primary domestic provider of its equity fund family. These will be offered through Citigroup's Global Wealth Management businesses, Smith Barney and the Citigroup Private Bank, as well as Primerica and Citibank.

The transaction is expected to close during the fourth quarter subject to certain regulatory approvals and customary closing conditions. In connection with the transaction, Citigroup is seeking approval of asset management's mutual fund boards and shareholders.