Morgan Stanley eyes $13 billion E-Trade acquisition

Morgan Stanley has lodged a $13 billion all-stock bid to acquire E-Trade, promising the online brokerage firm's shareholders that the deal will create a combined business with best-in-class product and service offerings to support the full spectrum of wealth

Online brokerage firm E-Trade is the subject of an acquisition bid that, if successful, would move investment bank Morgan Stanley into the consumer trading space.

Morgan Stanley has lodged a $13 billion all-stock bid to acquire E-Trade, promising the online brokerage firm’s shareholders that the deal will create a combined business with best-in-class product and service offerings to support the full spectrum of wealth.

The acquisition would rebalance Morgan Stanley’s businesses towards online consumer trading. E-Trade has more than 5.2 million client accounts and more than $360 billion of retail client assets.

E-Trade, which has been active in the digital brokerage and banking space for nearly 40 years, boasts technology platforms that will complement Morgan Stanley’s adviser-facing technology.

Its full suite of digital banking services, including direct integration with brokerage accounts, checking and high-yield savings accounts, will accelerate Morgan Stanley’s digital banking efforts.

When the transaction closes as planned in Q4 2020, it will add approximately $56 billion of low-cost deposits, providing significant funding benefits to Morgan Stanley. 

Mike Pizzi, chief executive officer of E-Trade, said of the deal: “Since we created the digital brokerage category nearly 40 years ago, E-Trade has consistently disrupted the status quo and delivered cutting-edge tools and services to investors, traders, and stock plan administrators.”

“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. Bringing E-Trade’s brand and offerings under the Morgan Stanley umbrella creates a truly exciting wealth management value proposition and enables our collective team to serve a far wider spectrum of clients.” 

Pizzi will continue to run the E-Trade business within Morgan Stanley and lead the ongoing integration effort. He will also join the bank’s operating and management committees.

James Gorman, chairman and chief executive officer of Morgan Stanley, said: “E-Trade represents an extraordinary growth opportunity for our wealth management business and a leap forward in our wealth management strategy. The combination adds an iconic brand in the direct-to-consumer channel to our leading advisor-driven model, while also creating a premier workplace wealth provider for corporations and their employees.”

Image: Shutterstock

Mark Dugdale