Morgan Stanley Acquires E*TRADE

Morgan Stanley officially acquires discount broker dealer E*TRADE Financial Corporation over a $13 billion all-stock deal.

Last week, the Federal Reserve gave its coveted regulatory nod after the long chase. This came at the same time with another high-profile partnership with the Charles Schwab-TD Ameritrade deal.

In February this year, reports announced the deal to push Morgan Stanley’s leadership position in the Wealth Management industry.

According to the financial services juggernaut, the successful acquisition is a product of both parties’ efforts in the last six months.

The E*TRADE acquisition will be a strategic venture for the New York-based firm as the financial corporation has the best-in-class, direct-to-consumer digital channel it patiently built in the last 38 years.

The merger put Morgan’s market position to a new high, now managing approximately 3.3 trillion assets.

E*TRADE has reported unprecedented demand for its all-encompassing services during the pandemic.

It largely benefitted from market volatility raised along with the health crisis, as more retail traders jumped to book profits.

For the record, it added 80,507 new retail clients and 17,514 corporate accounts for the month of August alone.

Details and Benefits

The merger should bring forth significant changes to both firms.

On per share held by E*TRADES’ investors, shareholders will get stock equivalent of 1.0432 from Morgan Stanley shares.

This translates to $58.74 per share price based on Morgan’s common stock closing price during the acquisition announcement last February 2020.

The combined entity results to a total of 8.2 million retail client relationship and accounts. And 4.6 million stock plan participants.

For the post-closure period, cost savings will reach $400 million along with funding synergies of $150 million from the brokerage’s $56 billion deposits.

Despite the acquisition, E*TRADE would continue to offer commission-free brokerage services with its existing brand.