Pedestrians walk outside an E*Trade Financial office in New York, U.S.
Daniel Acker | Bloomberg | Getty Images
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Wall Street investment bank Morgan Stanley will acquire E-Trade for $13 billion, the companies said on Thursday, the latest in a consolidation wave for the retail brokerage industry.
Morgan Stanley will pay $58.74 a share in stock for E-Trade.
Morgan Stanley shares fell more than 4% in premarket trading. E-Trade shares jumped 20% before they were halted.
Morgan Stanley will reportedly pay $58.74 a share in stock for E-Trade.
“E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” said James Gorman, Chairman and CEO of Morgan Stanley, in a press release. “In addition, this continues the decade-long transition of our Firm to a more balance sheet light business mix, emphasizing more durable sources of revenue.”
The deal is expected to closed in the fourth quarter of 2020.
The Morgan Stanley and E-trade deal follows the a trend of consolidation in the brokerage industry. Last year, Charles Schwab announced it would buy TD Ameritrade in a $26 billion all-stock deal.
The mergers are generally expected by analysts given the massive amount of disruption that has taken place, with all the major brokers dropping commission fees for trading last year. Schwab was the first of the major players to make the move, eliminating commissions last October. Schwab’s competitors, including Fidelity, Interactive Brokers and E-trade, were quick to follow.
E-trade, with 5.2 million client accounts and over $360 billion of retail client assets, will be adding to Morgan Stanley’s 3 million client accounts and $2.7 trillion of client assets, the release said.