In a statement made on Thursday, Morgan Stanley said it would buy the Boston-headquartered group, which manages $500 billion of assets.
Shares of Eaton Vance Corp. spiked 47% at the opening bell Morgan Stanley rose slightly.
"Eaton Vance is a flawless fit for Morgan Stanley", the company's chief said James P. Gorman said in a statement. Gorman said in statement Thursday, Oct. 8, 2020, that the transaction adds more fee-based revenues to its investment banking and institutional securities franchise.
At closing, Morgan Stanley's subsidiary, Morgan Stanley Investment Management, or MSIM, will have about $1.2 trillion of assets under management and more than $5 billion of combined revenues.
Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 of Morgan Stanley common stock, or approximately $56.50 per share.
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Faust, who owns more than 3.2 million shares of Eaton Vance outright, also holds more than 2.8 million stock options worth at least US$64 million, with some having yet to vest, according to calculations by Bloomberg News based on regulatory filings.
Morgan Stanley chairman and chief executive officer James Gorman commented on the acquisition.
Morgan Stanley said the two businesses were "highly complementary" with limited overlap in investment and distribution capabilities.
The acquisition is subject to customary closing conditions and is expected to close in the second quarter of 2021.
"By joining Morgan Stanley, we will be able to further accelerate our growth by building upon our common values and strengths, which are focused on our commitment to investment excellence, innovation and client service".
The deal with Eaton Vance continues Morgan Stanley's "shift away from trading toward steadier, simpler businesses like money management", The Wall Street Journal reported. It is anticipated that the transaction will not be taxable to Eaton Vance shareholders to the extent that they receive Morgan Stanley common stock as consideration.