Morgan Stanley has announced that it would buy asset management firm Eaton Vance for around USD 7 billion in a cash-and-stock deal. This advances Chief Executive Officer James Gorman’s push to grow the investment management business of the bank. The financier said that the deal will boost its investment management’s assets to about USD 1.2 trillion and revenue to USD 5 billion. James Gorman said, in a statement, that Eaton Vance is a perfect fit. According to reports, Morgan Stanley has been trying to strike the deal for several years. However, the CEO has ruled out the likelihood of any further acquisitions. “We have made our bed and this is the time to lie. There are no more acquisitions,” he said.
Shareholders of Eaton will receive USD 28.25 per share in cash and 0.5833 shares of Morgan Stanley for each share held. The deal will give a premium of 38 per cent to the last closing price of Eaton. Shares of Eaton jumped after the deal while those of Morgan Stanley went down. Gorman came to the helm a decade ago and has pulled off several big acquisitions including USD 13 billion trade earlier this year. The asset management has is the latest buyout. The deal is crucial for the firm as it struggled since the financial crisis of 2008 and 2009.
Meanwhile, Morgan Stanley has announced that it would realize USD 150 million of annual savings through the deal. Eaton will also pay its shareholders a one-time special cash dividend of USD 4.25 per share before the close of the deal. The deal is also expected to be break-even to earnings per share. Eaton will also pay its shareholders a one-time special cash dividend of USD 4.25 per share before the close of the deal. Meanwhile, Gorman has now the challenge of assuring the smooth transition. Gorman has been without a leader since the departure of ex-president Colm Kelleher last year.