Morgan Stanley said on Thursday it would buy discount brokerage E*Trade Financial Corp. in an all-stock deal worth about $13 billion, the biggest deal by a Wall Street bank since the financial crisis.
The deal will help Morgan Stanley boost its wealth management unit, a business that Chief Executive Officer James Gorman has been trying grow to help it ride out weak periods for trading and investment banking.
E*TRADE has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets.
E*Trade shareholders will receive 1.0432 Morgan Stanley shares for each share as part of the deal. That translates to $58.74 per share – a premium of 30.7% to the last closing price of E*Trade shares.
The deal is expected to close in the fourth quarter of 2020.
Shares of E*Trade Financial were up 24.6% at $56 in the premarket trade.
