- Morgan Stanley announced Thursday that it will acquire online brokerage E*Trade in an all-stock transaction valued at $13 billion, according to a press release.
- E*Trade shares surged as much as 24% early Thursday before trading was halted.
- "E*TRADE's products, innovation in technology, and established brand will help position Morgan Stanley as a top player across all three channels: Financial Advisory, Self-Directed, and Workplace," said James Gorman, CEO of Morgan Stanley.
- Watch E*Trade trade live on Markets Insider.
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Shares of E*Trade jumped as much as 24% in early trading Thursday after Morgan Stanley announced it plans to acquire the online brokerage.
The definitive agreement is an all-stock transaction valued at approximately $13 billion, according to a statement released by Morgan Stanley. E*Trade shareholders will get $58.74 per share in stock, based on Morgan Stanley's Wednesday closing price. Shares of Morgan Stanley fell as much as 6% in early trading Thursday.
The combined platforms will have $3.1 trillion in assets and more than 8 million retail client relationships and accounts, according to a press release.
Acquiring E*Trade will significantly increase the scale and breadth of Morgan Stanley's Wealth Management franchise, and position it as a leader in the industry across all channels and wealth segments, the bank said. The deal is expected to close in the fourth quarter of 2020.
"E*Trade's products, innovation in technology, and established brand will help position Morgan Stanley as a top player across all three channels: Financial Advisory, Self-Directed, and Workplace," said James Gorman, CEO of Morgan Stanley.
He continued: "In addition, this continues the decade-long transition of our firm to a more balance sheet light business mix, emphasizing more durable sources of revenue."
The deal comes after Charles Schwab acquired TD Ameritrade last year in a $26 billion all-stock deal. Online brokerages have also faced increased pressure over fees in the last year, following Schwab's October announcement that it would slash commission fees to zero. The move pushed other major players such as Fidelity and E*Trade to slash fees as well.
E*Trade adds over 5.2 million client accounts with more than $360 billion in assets to Morgan Stanley's 3 million clients and $2.7 trillion in assets. Mike Pizzi, CEO of E*Trade, will join Morgan Stanely to continue running the online brokerage and lead the integration effort.
Shares of E*Trade were halted for news at 7:24 a.m. in New York, but resumed trading at 8 a.m.
