By Kuldip K. Ambastha
Morgan Stanley (MS) and Eaton Vance Corporation (EV) were in the news prominently in this past trading week. In a deal of cash plus stock, Morgan Stanley will be buying Eaton Vance Corporation for $7 billion. James Gorman, head of Morgan Stanley, announced this deal on Thursday, October 8, 2020. (On this day, the stock of Morgan Stanley rose a little by 0.6%, while the stock of Eaton Vance Corporation rose a lot by 48.1%.)
During 2020, the stock of Morgan Stanley has outperformed its Wall Street peers. James Gorman has mentioned that the 38% premium being paid to acquire Eaton Vance’s assets under management (AUM of about $500 billion) is worth paying in order to enhance Morgan Stanley even further.
After this acquisition is completed, Morgan Stanley Investment Management (MSIM) will have roughly $1.2 trillion of AUM plus more than $5 billion in revenues. The acquisition will most likely close in 2Q2021, and may help in the executive search for an able successor to James Gorman as the head of Morgan Stanley in his Chairman and Chief Executive Officer (CEO) roles.
Keywords – Morgan Stanley, MS, Eaton Vance Corporation, Eaton Vance, EV, banking, financial services, investment management, asset management, mergers & acquisitions, M&A, mergers, acquisitions, deal-making, deals.
Disclosure – The principals of Ambastha Financial LLC have a long equity position in MS plus a short option position in MS, and no positions in EV. The clients of Ambastha Financial LLC do not have any positions in MS and EV.
Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.