Morgan Stanley is offering $7 billion to acquire Eaton Vance. That will have it using a mix of cash and stock for the company, which will combine with its own Morgan Stanley Investment Management (MSIM) division.
The offer for Eaton Vance values EV stock at $56.50 per share. It will have shareholders of the stock receiving $28.25 per share in cash and .583 shares of MS stock for each share of EV stock that they own. That represents a 37.7% premium over the stock’s closing price of $41.03 on Wednesday.
Morgan Stanley and Eaton Vance note that there are several benefits to this M&A news. That includes Eaton Vance and MSIM not having much overlap in investment management. The two companies are also expecting cost savings of $150 million.
Morgan Stanley also points out that investors have nothing to fear when it comes to earnings. The company says that the acquisition will be breakeven for its earnings per share starting off and marginally accretive afterward.
James Gorman, chairman and CEO of Morgan Stanley, said this about the M&A news.
“This transaction further advances our strategic transformation by continuing to add more fee-based revenues to complement our worldclass investment banking and institutional securities franchise. With the addition of Eaton Vance, Morgan Stanley will oversee $4.4 trillion of client assets and AUM across its Wealth Management and Investment Management segments.”
EA stock was up 47.8% as of Thursday afternoon.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.