Morgan Stanley Acquires E-Trade for $13B
January 31, 2023
Ben O’Donnell
Target Company Overview
Similar Investments By Sponsor
E-Trade was one of the first online brokerage firms created. The company
provides a range of financial services including trading, investing, banking,
and other institutional services. The company has more than 5 million
brokerage accounts, with more than $360 billion in customer assets.
Sponsor Overview
Morgan Stanley Private Equity is the private equity arm of Morgan Stanley.
Morgan Stanley PE invests in a range of industries, including technology,
healthcare, and financial services. MSPE has a long history of successful
Investments.
Bridgepoint Education
August 2018
•
•
Justification Behind Purchase Price
MSPE decided to purchase E-Trade because of the company's strong
customer base, brand, and technology platform. According to Factset,
comparable deals have priced from $12.6 to $28.2 billion. Morgan Stanley
PE bought E-Trade at a 40% premium, which is believed to be a fair price,
according to equity researchers. In addition, the growth potential of the
online brokerage industry is large. This acquisition provides MS with an
Investment opportunity through the expansion it’ll provide the company, as
well as expansion into the growing online brokerage market. Morgan
Stanley paid $58.74 a share and after the deal was announced E-Trade’s
shares increased over 21% to $54.73 a share
Acquisition to boost educational
services business
Gained access to a leading provider of
online education programs
Eaton Vance
December 2020
•
•
Reasons For Buyout
Bought to strengthen position in asset
management
Bought to better serve clients needs for
income and growth
The buyout of E-Trade is focused on providing multiple expansions. MSPE
made the acquisition to build up company growth and improve its financial
performance. Improving financial performance will improve the MS
valuation over time. Morgan Stanley expects to realize around $400 million
in expense synergies and bringing in a large number of client assets will help
increase Morgan Stanley’s market position in the sector significantly.
Financing Structure
After researching the debt used to complete the transaction, this
information has not been found. Based on the size of this deal, it can be
assumed MS used debt to finance this transaction based on the benefits it
provides including leverage, lower cost of capital needed, and tax benefits.
AXA XL
September 2021
•
•
Bought to expand insurance business
Bought to expand MS reach and
customer base