This deal will have Morgan Stanely acquiring E*Trade. It will be doing this by trading its own shares of MS stock for shares of ETFC stock. The exchange value is 1.0432 shares of MS stock for each share of E*Trade stock.
The offer from Morgan Stanley values each share of E*Trade stock at $58.74, based on the closing price of MS stock on Wednesday. This has the total value of the deal reaching $13 billion. It also represents a 30.74% premium over the closing price of ETFC stock on Wednesday.
The deal between the two companies will have current E*Trade CEO Mike Pizzi continuing to manage the brand once it joins Morgan Stanley. He will report directly to MS CEO James Gorman and will also join its Operating and Management Committees. Another part of the deal will have Morgan Stanely bringing one of E*Trade’s independent directors into its Board of Directors.
Gorman says this about the deal.
“E*Trade represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy. The combination adds an iconic brand in the direct-to-consumer channel to our leading advisor-driven model, while also creating a premier Workplace Wealth provider for corporations and their employees.”
Before the deal between E*Trade and Morgan Stanley can close, it will have to complete customary conditions. That includes approval from regulators, as well as investors. So long as everything goes smoothly, the transaction will reach completion in the fourth quarter of 2020.
ETFC stock was up 22.81% and MS stock was down 4.21% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.