Morgan Stanley to buy broker E*Trade Financial for $13 billion

Morgan Stanley announced on Thursday (20) that it will buy low-cost broker E*Trade Financial in a stock transaction of about $13 billion (nearly $45 billion), wall street bank's largest deal since the financial crisis. The deal will help Morgan Stanley boost its wealth management business, a unit that Chief Executive James Gorman is trying to build to isolate the bank from weak periods in asset trading units and investment banking. Morgan Stanley will receive more than 5.2 million E*Trade customer accounts and $360 billion in retail customer assets as part of the deal. The broker's chief executive, Mike Pizzi, will continue to run the business after the transaction. "E*Trade represents an extraordinary growth opportunity for the patrimonic management business," Gorman said. E*Trade became popular for nearly two decades, displaying commercials that criticized financial advisors for high rates. Its revenue growth has been hit in recent years as so-called roboadvisers rise, by falling commissions and lower interest rates. E*Trade shareholders will receive 1,0432 Morgan Stanley shares for each share they own as part of the agreement. This equates to $58.74 per share - a premium of 30.7% above the price of e*Trade's last stock close. The transaction is expected to be completed in the fourth quarter of 2020.