Morgan Stanley agrees to buy Solium Capital at 43% premium

Purchase will allow Morgan advisers to court tech workers as they start to accumulate wealth

Feb 11, 2019 @ 10:33 am

By Bloomberg News

Morgan Stanley agreed to buy Solium Capital Inc. in a bid to add younger clients and tech startups to its stock-plan administration business.

The firm will pay $19.15 (Canadian dollars) a share in cash, according to a statement Monday, or about 43% higher than Solium's closing price on Friday. The agreement values Solium at about $900 million.

(More:Morgan Stanley wants its advisers to be top of mind for Alexa)

Morgan Stanley will add Calgary-based Solium's 3,000 stock-plan clients and 1 million participants to its rival offering, which has 320 clients and 1.5 million participants. Solium's clients include such startups as Stripe Inc., Instacart Inc. and Shopify Inc., giving Morgan Stanley's investment bankers a chance to pitch those firms capital-raising ideas, while its advisers court tech workers as they start to accumulate wealth.

The large premium Morgan Stanley agreed to pay "might raise a brow, but we think this makes significant strategic sense," analysts at Evercore ISI said in a note, adding that the link-up "provides a real path towards the organic growth and next generation of clients that many investors have been questioning."

Shares of Morgan Stanley rose 0.9% to $41.17 in early trading at 9:07 a.m.

The Wall Street bank entered into a partnership with Solium in 2016 to administer equity-compensation plans for its corporate clients and their employees. The deal announced Monday won't affect Morgan Stanley's buyback plans, and is expected to be completed in the second quarter, according to the statement.

(More:Morgan Stanley wealth management revenue falls 6% in fourth quarter)

"The acquisition provides Morgan Stanley with broader access to corporate clients and a direct channel to their employees, as well as a greater opportunity to establish and develop relationships with a younger demographic and service this population early in their wealth accumulation years," Chief Executive Officer James Gorman said in the statement.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

How (and why) investors choose their advisors

Advisors - especially new advisors - are desperate to understand how to turn prospects into client. Brad Shepard of WisdomTree has the answer.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

Robert Moore, Cetera CEO, stepping down for health reasons

Chairman Ben Brigeman will serve as interim chief executive while a search for a permanent CEO is conducted.

The AMT is no longer a problem for many clients

With income thresholds higher and a lower SALT deduction after tax reform, the AMT will realistically only apply to wealthy Americans with out-of-the-ordinary tax events.

Cetera, other broker-dealers refuse to sign Ohio National contracts

Advisers wonder what the lack of a formal brokerage agreement means from a regulatory standpoint.

10 millennials making their mark in Washington — and beyond

These next-generation leaders are raising their voices and gaining influence over financial advice regulation and legislation.

Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print