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Morgan Stanley (MS)-Eaton Vance (EV) Merger Deal to Close Soon

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Morgan Stanley’s (MS - Free Report) deal to buy Eaton Vance is expected to conclude on Mar 1. The transaction, still subject to customary closing conditions, was announced last October.

Furthermore, in relation to the expected closure of the proposed deal, the deadline to select the form of merger consideration for shareholders of Eaton Vance has been announced. The same is set for 5:00 p.m., Eastern Time, on Feb 24.

Eaton Vance shareholders, who have not yet made their choices — cash, stock or mixed consideration — are required to submit election forms and a properly completed Notice of Guaranteed Delivery or confirmation of book-entry transfer. These have to be received by the exchange agent — Broadridge Corporate Issuer Solutions, Inc. — by the deadline.

Per the merger agreement, shareholders whose election forms are not received in proper form by the exchange agent by deadline will be deemed to have chosen mixed consideration. This entitles them to receive, for each share of Eaton Vance share, a combination of $28.25 in cash and 0.5833 of a share of Morgan Stanley common stock.

Upon the transaction’s closure, the Investment Management (IM) segment — to which Eaton Vance will be integrated to — will have more than $1.2 trillion of assets under management (AUM) and $5 billion of combined revenues.

Further, both the companies foresee long-term financial benefits from the deal. Through increased scale, improved distribution, cost savings of $150 million and Eaton Vance’s revenue opportunities, the combined entity will likely generate solid financial returns.

Over the past few years, Morgan Stanley has been undertaking initiatives to restructure operations, with a goal to increase reliable revenue sources. Hence, the company is focusing on the segments — Wealth Management and IM — as these are less dependent on capital markets. Its strategic expansion efforts — including the above-mentioned buyout of Eaton Vance, and acquisitions of E*Trade Financial and Shareworks — are noteworthy in this direction.

Since the announcement of the deal on Oct 7, shares of Morgan Stanley and Eaton Vance have surged 56.1% and 76.4%, respectively.



Currently, both Morgan Stanley and Eaton Vance carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of late, the asset management industry is undergoing significant consolidation. This January, BlackRock (BLK - Free Report) closed the acquisition of investment management services provider, Aperio Group LLC, from Golden Gate Capital and Aperio employees. Earlier in December 2020, Waddell & Reed Financial (WDR - Free Report) inked an agreement to be acquired by Macquarie Asset Management, the asset management division of Sydney, Australia-based Macquarie Group.

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