Morgan Stanley M.S. 2.03%
It said it was buying fund manager Eaton Vance for billion 1 billion just days after completing the takeover of discount broker E * Trade Financial Corp. to continue to move away from trading toward stable and simple businesses such as the company’s money management.
The deal nearly doubled the assets Morgan Stanley used on behalf of pension funds, insurance companies and other customers to tr 1.2 trillion and added about 1. 1.7 billion in annual revenue.
Morgan Stanley’s asset-management arm is the most lucrative of the bank’s four divisions but also the smallest, and was seen as highly specialized to compete with larger competitors.
Boston-based Eaton Vance, founded in 1924, brings in nearly 500 500 billion in assets and has an understanding presence in Morgan Stanley’s bonds and sustainable investments.
Morgan Stanley chief executive James Gorman said Eaton Vance executives went to his pay firm a few months ago and found an acceptable buyer, but the bank needed to complete its takeover of the e * trade first, which it did last week.
Morgan Stanley’s retail brokerage is already the largest distributor of Eaton Vance Funds, said CEO James Gorman.
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Simon Dawson / Bloomberg News
Morgan Stanley’s retail brokerage is the largest distributor of Eaton Vance Funds, Mr. Gorman said. And there are fundraising opportunities for Eaton Vance, which is mostly sold in the U.S., abroad where Morgan Stanley is big.
“It was kind of obvious,” Mr. Gorman said in an interview. “If we hadn’t done this someone else would have.”
In cash and shares to Eaton Vance shareholders. 56.50 per cent, a 40% premium that is likely to raise the eyebrows of Morgan Stanley’s own investors. Morgan Stanley has been seen making even more payments before, when he paid equally large premiums to acquire e * trade and, before that, a company called Solium, which manages employees’ stock.
“In January 2009, many people called me a premium [Morgan Stanley was paying] For [brokerage] Smith Barney was very high, “Mr Gorman said Thursday, referring to the takeover at the start of his term which is now widely seen as a domestic run. About the Eaton Vance deal, he said:” It’s worth it, but I’m perfectly comfortable. ”
The deal is expected to close in the second quarter of 2021.
Write to Liz Hoffman at [email protected]
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