Morgan Stanley has agreed to purchase Eaton Vance, one of the oldest American investment firms, for $7 billion. This is the second major acquisition this year for Morgan Stanley. In fact, the financial giant just closed its $13 billion E-Trade acquisition less than a week ago.
This deal is another step by Morgan Stanley to bolster its asset management business, which has lagged behind chief competitors JPMorgan and Goldman Sachs.
It’s now pursuing a strategy of M&A, a tactic that’s very similar to the one taken by other active wealth managers as they’ve seen passive management become increasingly prevalent. This includes the merger of Standard Life and Aberdeen in 2017, Invesco’s purchase of Oppenhimer last year, and Franklin Templeton’s takeover of Legg Mason.
Eaton Vance shareholders will receive $28.25 in cash and 0.5833 Morgan Stanley shares for each share of EV, a 38% premium based on Wednesday’s closing price. Eaton will also pay its shareholders a one time special dividend of $4.25 per share before the deal closes.