Morgan Stanley (NYSE:MS) is buying online brokerage E*Trade Financial Corp. (NASDAQ:ETFC) for $13 billion U.S.
The deal provides the investment bank with an online retail brokerage and furthers consolidation in the U.S. financial sector.
The all-stock takeover provides Morgan Stanley with E*Trade’s $360 billion U.S. of client assets, the two companies said in a written statement. Morgan Stanley also gets E*Trade’s direct-to-consumer and digital capabilities to complement its full-service, advisory-focused brokerage.
E*Trade posted worse-than-expected earnings last month and was forced to slash trading fees. The race to commission-free trading has shaken up the discount brokerage industry, with E*Trade rival Charles Schwab Corp. (NASDAQ:SCHW) announcing it was eliminating trading commissions for all U.S.-listed stocks, exchange-traded funds and options, and then agreeing to buy competitor TD Ameritrade Holding Corp.
E*Trade stockholders will receive 1.0432 Morgan Stanley shares for each of their shares, valued at $58.74 U.S. based on Wednesday’s closing price. Morgan Stanley slumped in early trading, dropping 4.5% to $53.75 U.S. in New York. E*Trade surged 6.8% to $48 U.S. per share.
