Morgan Stanley has stolen a march on Goldman Sachs with its deal to buy online brokerage E*Trade, says johnsfoley.
Morgan Stanley said on Feb. 20 it had agreed to buy discount brokerage E*Trade Financial in an all-stock deal worth about $13 billion, the biggest acquisition by a Wall Street bank since the financial crisis.
E*Trade has more than 5.2 million client accounts with over $360 billion of retail assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of assets. The brokerage’s 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 just over 30% to the closing price of E*Trade shares on Feb. 19.
Morgan Stanley expects cost savings of at least $400 million per year, realized over three years, as well as additional funding-cost synergies. The bank expects restructuring and integration costs of $800 million spread over three years.Shares of E*Trade were up more than 20% in premarket trade.
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