Morgan Stanley buys online trading platform ETrade for US$13bn

USA – Morgan Stanley, an American multinational investment bank and financial services company, has agreed on a US$13bn (€12bn) all-stock deal to buy online trading platform ETrade, in what is seen as a sharp escalation of the battle for middle America’s wealth management market.

According to the Financial Times, ETrade has more than 5.2 million client accounts and more than US$360bn of retail client assets.

After the acquisition, Morgan Stanley will add these clients to the US$2.7tn of assets it manages for three million wealthy customers.

The US bank’s Chief Executive, James Gorman, 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 US$26bn takeover of TD Ameritrade, its biggest competitor.

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

Punch Nigeria reported that ETrade shareholders will receive 1.0432 shares for each Morgan Stanley share.

Shares in ETrade rose by 24 per cent in pre-market trading while those of Morgan Stanley, which has a market capitalisation of about $90bn, 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 the Chief Executive of ETrade, Mike Pizzi.

Rival Goldman Sachs, also vying for a bigger slice of the US market, bought wealth manager United Capital last year.

With offices in more than 42 countries and more than 60,000 employees, the Morgan Stanely has clients including corporations, governments, institutions, and individuals.

The firm that specializes in institutional securities, wealth management and investment management ranked No. 67 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.

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