Morgan Stanley announced Thursday morning it had agreed to purchase fund manager Eaton Vance for $7 billion. The renowned Boston money manager has more than $500 billion in assets under management.
The deal, which comes just days after the firm closed its acquisition of ETrade, advances Morgan Stanley’s strategy of focusing on three businesses: institutional securities, wealth management and investment management.
After the deal closes, Morgan Stanley Investment Management will have approximately $1.2 trillion of assets under management and over $5 billion of combined revenues, the company said.
The ETrade takeover was the industry’s biggest since the financial crisis saddled banks with regulations that hobbled some of their signature businesses. Chief Executive James Gorman spent much of the past decade Morgan Stanley into a major wealth management player and shifting it away from its reliance on its trading and investment banking operations.
Eaton Vance shareholders will receive about $28.25 a share in cash and 0.5833 shares of Morgan Stanley. The purchase is expected to be completed in the second quarter of next year.
Eaton Vance shares surged to $58.74 at 7:59 a.m. in early New York trading, 43% above their closing price Wednesday and above the deal price. Morgan Stanley shares were trading at $47.70 after closing at $48.71 Wednesday.
Since the recent Sept. 24 market trough, Eaton Vance shares have gained 13.4%, while Morgan Stanley stock rose 4.5%. Over the same period the S&P 500 Index gained 5.5%.
Bloomberg News coverage is included in this story.
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