Morgan Stanley (MS) - Get Morgan Stanley (MS) Report agreed to buy asset management company Eaton Vance (EV) - Get Eaton Vance Corp. Report in a cash-and-stock deal with an equity value of about $7 billion.
Shares of Boston-based Eaton Vance were soaring 48% to $60.59, while Morgan Stanley, which is headquartered in New York, was up 1.33% to $49.35.
Under the terms of the agreement, which is expected to close in the second quarter of 2021, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 a share of Morgan Stanley common stock, representing a total consideration of about $56.50 a share.
The aggregate consideration paid to holders of Eaton Vance’s common stock will consist of about 50% cash and 50% Morgan Stanley common stock.
The transaction is expected to be breakeven to earnings per share immediately and marginally accretive thereafter.
The agreement has been approved by the voting trust that holds all of the voting common stock of Eaton Vance, the two companies said, and the combination will bring Eaton Vance’s leading U.S. retail distribution together with Morgan Stanley Investment Management’s international distribution.
Eaton Vance, which has roughly 1,871 employees, had consolidated assets under management of $507.4 billion as of July 31.
"Eaton Vance is a perfect fit for Morgan Stanley," said James P. Gorman, Morgan Stanley chairman and CEO, 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."
With the addition of Eaton Vance, Gorman said, "Morgan Stanley will oversee $4.4 trillion of client assets and AUM across its Wealth Management and Investment Management segments."