The acquisition is subject to customary closing conditions, including regulatory approvals and approval by E*TRADE shareholders, and is expected to close in the fourth quarter of 2020.
The deal will create a leading player in Workplace Wealth, combining E*TRADE’s U.S. stock plan business with Shareworks by Morgan Stanley, a top provider of public stock plan administration and private cap table management solutions.
This combination will enable Morgan Stanley to accelerate initiatives aimed at enhancing the workplace offering through online brokerage and digital banking capabilities, providing an enhanced client experience.
E*TRADE has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets.
According to James Gorman, Chairman and CEO of Morgan Stanley, E*TRADE’s products, innovation in technology, and established brand will help position the company as a top player across all three channels: Financial Advisory, Self-Directed, and Workplace.
Led by Mike Pizzi, Chief Executive Officer, E*TRADE has been a pioneer in the digital brokerage and banking space for nearly 40 years and is an iconic brand. Its consumer-facing technology platforms will complement Morgan Stanley’s advisor-facing technology. The company also provides a full suite of digital banking services, including direct integration with brokerage accounts, checking and high-yield savings accounts, accelerating Morgan Stanley’s digital banking efforts.
The transaction adds approximately $56 billion of low-cost deposits, which will provide funding benefits to Morgan Stanley. Upon integration, the combined Wealth and Investment Management businesses will contribute approximately 57% of the firm’s pre-tax profits, excluding potential synergies, compared to only approximately 26% in 2010.