Business

Morgan Stanley to Buy E-Trade for $13 Billion

Morgan Stanley to Buy E-Trade for $13 Billion

DealBook|Morgan Stanley to Buy E-Trade for $13 BillionThe move will give one of Wall Street’s powerful blue-chip firms control of a major presence in the world of online brokerages.The deal would give Morgan Stanley a big share of the online trading market.Credit…Lucas Jackson/ReutersFeb. 20, 2020Updated 8:28 a.m. ETMorgan Stanley announced on Thursday that it would buy E-Trade, the online discount brokerage, for about $13 billion, in the biggest takeover by a major American lender since the 2008 global fibioreportscial crisis. The deal would give Morgan Stanley — long known as one of Wall Street’s most blue-chip names, whose asset management business already caters to the wealthy — a big share of the market for online trading.It continues Morgan Stanley’s strategy of increasingly focusing on asset management rather than investment banking and high-stakes trading, betting on steady fees over bigger paydays and bigger risks.Thursday’s deal highlights the increasing convergence of Wall Street and Main Street. Elite bastions of corporate fibioreportsce are increasingly seeking to cater to customers with smaller pocketbooks. And online brokerages that once hoped to overthrow traditional trading houses are instead suffering from a price war that has slashed their profits.The deal evokes a similar move toward Main Street by Goldman Sachs, Morgan Stanley’s traditional Wall Street rival. Goldman created a retail-focused lending arm, named Marcus, in 2016 and partnered with Apple last year to offer a credit card. Last month, Goldman said that it intended to grow its retail deposit base to $125 billion, and its consumer loan and card balance to $20 billion, over the next five years.Meanwhile, E-Trade has struggled amid a price war among brokerages, begun in earnest last fall when Charles Schwab eliminated fees for the trading of stocks and exchange-trade funds. Schwab later agreed to buy TD Ameritrade for $26 billion.Acquiring E-Trade will give Morgan Stanley an additional 5.2 million customer accounts and $360 billion in assets. Before the deal, Morgan Stanley oversaw $2.7 trillion in assets, largely tied to big companies and wealthy individuals.Under the terms of the deal announced on Thursday, Morgan Stanley will buy E-Trade using its own stock. Its offer is worth about $58.74 a share as of Wednesday’s market close, a 30 percent premium on the value of the online brokerage’s shares.This is a developing story. Check back for updates.

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