Morgan Stanley is buying the investment management firm Eaton Vance in a deal valued at about seven billion US dollars (£5.4bn)
Eaton Vance, based in Boston, has over 500 billion dollars (£387bn) in assets under management.
Morgan Stanley Chairman and CEO James P Gorman said in a prepared statement on Thursday that Eaton Vance will add more fee-based revenues to its investment banking and institutional securities franchise.
The deal will give Morgan Stanley’s investment management arm approximately 1.2 trillion dollars (£930bn) of assets under management and more than five billion dollars (£3.8bn) of combined revenues.
$MS: “With the addition of Eaton Vance, Morgan Stanley will oversee .4 trillion of client assets and AUM across its Wealth Management and Investment Management segments,” said James P. Gorman, Chairman and CEO of Morgan Stanley— Morgan Stanley (@MorganStanley) October 8, 2020
$MS: “Eaton Vance is a perfect fit for Morgan Stanley,” said James P. Gorman, Chairman and CEO of Morgan Stanley. “This transaction further advances our strategic transformation”. https://t.co/QpBKcj4yAI— Morgan Stanley (@MorganStanley) October 8, 2020
Eaton Vance shareholders will receive 28.25 dollars per share in cash and 0.5833 of Morgan Stanley common stock, or approximately 56.50 dollars per share.
Based on the 56.50 dollars per share, the amount paid to Eaton Vance shareholders will consist of about 50% cash and 50% Morgan Stanley common stock.
Each Eaton Vance shareholder will have the option to choose all cash or all stock, subject to a proration and adjustment mechanism.
Eaton Vance shareholders will also receive a one-time special cash dividend of 4.25 dollars per share to be paid before the transaction’s closing by Eaton Vance to its shareholders from existing balance sheet resources.
The deal is expected to close in the second quarter of next year.
Shares of Eaton Vance spiked 43% before the opening bell.