US financial powerhouse Morgan Stanley said Thursday it would acquire wealth management firm Eaton Vance for about $7 billion unveiling its second major takeover of 2020.
The transaction, which comes on the heels of a $13 billion purchase of E-Trade, will bring another $500 billion in assets under management (AUM) within Morgan Stanley’s umbrella and broaden its standing as a wealth manager, the companies said in a statement.
“Eaton Vance is a perfect fit for Morgan Stanley,” the company’s chief said James P. Gorman said in a statement.
“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.”
The statement said there was limited overlap between the firms and highlighted Eaton Vance’s presence in environmental, social and corporate governance (ESG) investing through its Calvert funds.
Gorman said that under the deal Morgan Stanley will oversee $4.4 trillion of client assets and AUM across its Wealth Management and Investment Management segments.
Gorman has been credited with turning around Morgan Stanley, which struggled through the 2008 financial crisis, but has picked up momentum in recent years by deemphasizing riskier businesses and focusing on asset management, which provides a steadier revenue stream.
With the deal, Morgan Stanley Investment Management (MSIM), will have over $5 billion of combined revenues, and will bring Eaton Vance’s leading US retail distribution together with MSIM’s international distribution, they said.
The transaction comes on the heels of the E-Trade takeover, which closed only on October 2. The E-Trade deal bolstered Morgan Stanley’s exposure to middle-class consumers and online trading.
Gorman said Thursday the company is moving into a consolidation phase after two large deals and would not pursue additional mergers.
“We’re not doing more acquisitions,” he said on a conference call with analysts. “We’ve made our bed and want to live in it.”
Shares of Eaton Vance soared 46 percent to $59.73 in early trading, while Morgan Stanley fell 1.3 percent to $48.05.
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