Morgan Stanley has entered an agreement to acquire Eaton Vance for close to $10 billion.
The two parties have entered a definitive agreement which will see Morgan Stanley advance its plans to have three world-class business units in institutional securities, wealth management and investment management. The transaction will be 50% cash funded, with Morgan Stanley using about 100bps of excess capital.
Through the acquisition, Morgan Stanley Investment Management (MSIM) will oversee about $1.67 trillion in assets and almost $7 billion in combined revenues.
The terms of the agreement see Eaton Vance shareholders will receive US$28.25 per share in cash and 0.5833x of Morgan Stanley common stock, for a total consideration of about US$56.50 per share. They will also receive a special cash dividend of US$4.25 per share.
|Sponsored by BlackRock|
Looking to build resilience into your portfolio?
"MSIM and Eaton Vance are highly complementary with limited overlap in investment and distribution capabilities. Eaton Vance is a market leader in key secular growth areas, including in individual separate accounts, customised investment solutions through Parametric, and responsible ESG investing through Calvert," Morgan Stanley said.
"A leader in value-add fixed income solutions, Eaton Vance fills product gaps and delivers quality scale to the MSIM franchise. The combination will also enhance client opportunities, by bringing Eaton Vance's leading US retail distribution together with MSIM's international distribution."
Morgan Stanley said the deal will enable it to generate attractive returns through increased scale, improved distribution, cost savings of about $209 million and revenue opportunities.
Eaton Vance chief executive Thomas E. Faust, Jr. said joining Morgan Stanley will further accelerate Eaton Vance's growth.
"Bringing Eaton Vance's leading brands and capabilities under Morgan Stanley creates a uniquely powerful set of investment solutions to serve both institutional and retail clients in the US and internationally," he said.
Adding to this, Morgan Stanley chair and chief executive James P. Gorman said Eaton Vance is a perfect fit for the business.
"This transaction further advances our strategic transformation by continuing to add more fee-based revenues to complement our world-class investment banking and institutional securities franchise. With the addition of Eaton Vance, Morgan Stanley will oversee US$4.4 trillion of client assets and AUM across its wealth management and investment management segments," Gorman said.
Likewise, head of MSIM Dan Simkowitz said the business is looking forward to the partnership.
"Eaton Vance brings strong brand recognition and high quality complementary platforms in key secular growth areas, providing numerous incremental opportunities to increase the reach of our asset management franchise and our value proposition for clients," he said.
The transaction is subject to closing conditions and is expected to close by mid-2021.