Morgan Stanley snaps up asset manager Eaton Vance in $7 billion takeover as its buying spree continues

REUTERS/Mike Segar
  • Morgan Stanley said on Thursday it has agreed to acquire investment manager Eaton Vance in a cash-and-stock deal worth $US7 billion.
  • “Eaton Vance is a perfect fit for Morgan Stanley,” CEO James Gorman said, adding that the asset manager will add more fee-based revenues to its investment banking and institutional securities franchise.
  • The deal is part of the Wall Street firm’s push to acquire companies across a number of platforms, including equity and fixed income.
  • Morgan Stanley closed a $US13 billion acquisition with online brokerage eTrade last week.
  • Visit Business Insider’s homepage for more stories.

Morgan Stanley said on Thursday it had agreed to buy US asset manager Eaton Vance, in a deal worth $US7 billion on Thursday, advancing CEO James Gorman’s push to strengthen the bank’s businesses.

Boston-based Eaton Vance holds about $US500 billion in assets under management. Under the deal, Morgan Stanley’s investment-banking division will hold about $US1.2 trillion of managed assets and over $US5 billion in combined revenue.

“Eaton Vance is a perfect fit for Morgan Stanley,” CEO Gorman said in a statement, and added that the deal advances its “strategic transformation by continuing to add more fee-based revenues.”

The cash-and-stock deal is expected to close in the second quarter of 2021.

Under the agreement, Eaton Vance shareholders will receive a combination of cash and stock, or a total of $US56.50 a share, and a one-time cash dividend of $US4.25 a share before market closing.

Read More:

Betting against the FTSE 100 netted traders £418 million in September. These are the top 5 most and least profitable short sells last month

Eaton Vance shares were up 44% in pre-market trading on Thursday, while Morgan Stanley was down 3%.

Morgan Stanley expects to cut about 4% of the group’s combined expenses through the deal, thereby delivering $US150 million in annual savings.

Business Insider’s Meghan Morris reported last year that the bank was exploring acquisitions for both its wealth and investment management businesses. In an earnings call, CEO Gorman said Morgan Stanley could execute a “string of pearls-type acquisitions” and scale up its fixed-income platform over a couple of years by betting on not one, but a “series of answers.”

The bank closed a $US13 billion acquisition with online brokerage eTrade earlier this month. Last year, Morgan Stanley acquired stock-plan operator Solium Capital to add potential customers to its wealth management business.

Read More:

A $US2.5 billion investment chief highlights the stock-market sectors poised to benefit the most if stimulus is passed after the election — and says Trump ending negotiations doesn’t threaten the economic recovery

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.