Morgan Stanley buying Eaton Vance in deal valued at USD7B

NEW YORK (AP) — Morgan Stanley is buying the investment management firm Eaton Vance in a deal valued at about USD7 billion. Eaton Vance, based in Boston, has over USD500 billion in assets under management.

Morgan Stanley Chairman and CEO James P Gorman said in a prepared statement yesterday that Eaton Vance will add more fee-based revenues to its investment banking and institutional securities franchise. The deal will give Morgan Stanley’s investment management arm approximately USD1.2 trillion of assets under management and more than USD5 billion of combined revenues.

Eaton Vance shareholders will receive USD28.25 per share in cash and 0.5833 of Morgan Stanley common stock, or approximately USD56.50 per share. Based on the USD56.50 per share, the amount paid to Eaton Vance shareholders will consist of about 50 per cent cash and 50 per cent Morgan Stanley common stock.

Each Eaton Vance shareholder will have the option to choose all cash or all stock, subject to a proration and adjustment mechanism. Eaton Vance shareholders will also receive a one-time special cash dividend of USD4.25 per share to be paid before the transaction’s closing by Eaton Vance to its shareholders from existing balance sheet resources. The deal is expected to close in the second quarter of next year.

Shares of Eaton Vance spiked 43 per cent before the opening bell.