Eaton for lunch

8 October 2020 By John Foley Follow @johnsfoley

A $7 bln deal to acquire the U.S. asset manager, just days after completing its E*Trade purchase, makes boss James Gorman an unlikely M&A machine. Such deals can be risky, but Gorman has advantages others don’t: a clear strategy, bags of capital, and a relatively clean rap sheet.

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Morgan Stanley agreed to buy asset manager Eaton Vance for an equity value of $7 billion in an even split of cash and shares, the Wall Street firm said on Oct. 8.

The deal will create $150 million in annual cost savings, Morgan Stanley said.

Eaton Vance shareholders will receive $28.25 per share in cash and just under 0.6 Morgan Stanley shares for a total value of $56.50 a share, a 38% premium to Eaton Vance's closing stock price on Oct. 7. Eaton Vance shareholders will also receive a $4.25-per-share special dividend. Morgan Stanley expects the deal to close in the second quarter of 2021.

Eaton Vance had $507 billion of assets under management at the end of July. Morgan Stanley's investment management unit will have $1.2 trillion of assets and $5 billion of revenue following the deal, according to the company.

On Oct. 2, Morgan Stanley completed a $13 billion all-share merger with brokerage E*Trade Financial, which it announced in February.

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