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Morgan Stanley To Acquire Eaton Vance For About $7 Bln – Quick Facts

Morgan Stanley (MS) will acquire Eaton Vance Corp. (EV) for an equity value of about $7 billion, the two companies said Thursday. Shares of Eaton Vance are gaining about 43 percent in pre-market activity following the news.

Eaton Vance is a provider of investment strategies and wealth management solutions with over $500 billion in assets under management or AUM.

According to Morgan Stanley, the acquisition advances its strategic transformation with three businesses of scale: Institutional Securities, Wealth Management and Investment Management.

The companies expect the acquisition to close in the second quarter of 2021. Following the acquisition, Morgan Stanley Investment Management or MSIM will be a leading asset manager with about $1.2 trillion of AUM and over $5 billion of combined revenues.

Under the terms of the merger deal, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833x of Morgan Stanley common stock for a total consideration of about $56.50 per share.

Based on the $56.50 per share, the aggregate consideration paid to holders of Eaton Vance’s common stock will consist of about 50 percent cash and 50 percent Morgan Stanley common stock.

In addition, the merger deal contains an election procedure that will allow each Eaton Vance shareholder to seek all cash or all stock, subject to a proration and adjustment mechanism.

Eaton Vance common shareholders will also receive a one-time special cash dividend of $4.25 per share to be paid pre-closing by the company to its common shareholders from existing balance sheet resources.

“This transaction further advances our strategic transformation by continuing to add more fee-based revenues to complement our world-class investment banking and institutional securities franchise. With the addition of Eaton Vance, Morgan Stanley will oversee $4.4 trillion of client assets and AUM across its Wealth Management and Investment Management segments,” said James Gorman, Chairman and Chief Executive Officer of Morgan Stanley.

Morgan Stanley noted that the combination will better position it to generate attractive financial returns through increased scale, improved distribution, cost savings of $150 million or 4 percent of MSIM and Eaton Vance expenses, and revenue opportunities.

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