Morgan Stanley buys online platform ETrade for $13bn

Move escalates battle for middle America’s wealth management market

Morgan Stanley’s HQ in New york.

Morgan Stanley’s HQ in New york.

 

Morgan Stanley has agreed a $13 billion (€12 billion) all-stock deal to buy online trading platform ETrade, in a sharp escalation of the battle for middle America’s wealth management market.

ETrade has more than 5.2 million client accounts and more than $360billion of retail client assets, which Morgan Stanley will add to the $2.7 trillion of assets it manages for three million wealthy clients.

James Gorman, the US bank’s chief executive, called the deal “an extraordinary growth opportunity for our wealth management business and a leap forward in our wealth management strategy”.

The acquisition comes less than two months after Charles Schwab, the US’s largest online brokerage, unveiled a $26 billion takeover of TD Ameritrade, its biggest competitor.

It also follows less than a year after Morgan Stanley spent $900 million stock plans manager Solium, in what was its biggest M&A deal since the financial crisis.

ETrade shareholders will receive 1.0432 shares for each Morgan Stanley share. Shares in ETrade rose 24 per cent in pre-market trading. Shares in Morgan Stanley, which has a market capitalisation of about $90 billion, fell 3.66 per cent.

“By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities,” said Mike Pizzi, chief executive of ETrade.

Rival Goldman Sachs, also vying for a bigger slice of the US market, bought wealth manager United Capital last year. – Copyright The Financial Times Limited 2020