Morgan Stanley agrees to buy Solium Capital at 43% premium

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
By  Bloomberg
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.

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