Morgan Stanley is buying ETrade for $13 billion

Morgan Stanley is acquiring ETrade Financial Corp. in a $13 billion deal that is certain to reshuffle the deck among financial services industry giants.

The all-stock deal, which was announced Thursday morning, will create a combined platform with $3.1 trillion in client assets, 8.2 million retail client relationships and accounts, and 4.6 million stock plan participants.

This would represent the largest acquisition by a U.S. bank in more than a decade.

The combination will significantly increase the scale and breadth of Morgan Stanley’s Wealth Management franchise, and positions Morgan Stanley to be an industry leader in wealth management across all channels and wealth segments.

ETrade has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets.

Morgan Stanley’s full-service, adviser-driven model coupled with ETrade’s direct-to-consumer and digital capabilities will allow the combined business to provide best-in-class product and service offerings to support the full spectrum of wealth.

According to The Wall Street Journal, which apparently was given advance notice of the deal between the two publicly traded companies, Morgan Stanley sees the addition of ETrade as a way to better compete against the likes of Fidelity Investments and Charles Schwab Corp.

“We’ll take on Schwab. We’ll take on Fidelity,” Morgan Stanley CEO James Gorman told the Journal.

Under the terms of the agreement, ETrade stockholders will receive 1.0432 Morgan Stanley shares for each ETrade share, which represents per share consideration of $58.74 based on the closing price of Morgan Stanley common stock on Wednesday.

The deal is expected to close by the end of the year.

[More: ETrade launches national adviser referral network]