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Morgan Stanley to buy ETrade in $13 bn deal

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LONDON: Morgan Stanley said on Thursday it would buy discount brokerage ETrade Financial Corp in an all-stock deal worth about $13 billion, the biggest deal by a Wall Street bank since the financial crisis.


The deal will help Morgan Stanley boost its wealth management unit, a business that Chief Executive Officer James Gorman has been trying to build out to insulate the bank from weak periods for trading and investment banking.


Morgan Stanley will get ETrade’s more than 5.2 million client accounts and $360 billion of retail client assets as part of the deal. The brokerage’s CEO, Mike Pizzi, will continue to run the business following the merger.


“ETrade represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” Gorman said.


ETrade became popular nearly two decades ago by running commercials that blasted financial advisers for high fees.


Its revenue growth has taken a hit in recent years from the emergence of digital upstarts called roboadvisers, falling commissions and lower interest rates.


ETrade shareholders will receive 1.0432 Morgan Stanley shares for each share as part of the deal. — Reuters


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