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Morgan Stanley to buy Eaton Vance for $7 billion in investment-management push

October 9, 2020

By Niket Nishant and Matt Scuffham

(Reuters) – Morgan Stanley <MS.N> has agreed to buy Eaton Vance Corp <EV.N> for about $7 billion in a cash-and-stock deal that can quickly expand its investment-management business and add more offerings for retail investors, the bank said on Thursday.

The transaction is the latest move by Chief Executive James Gorman to reshape Morgan Stanley into one of the biggest global money managers through a series of acquisitions that began just before he took over more than a decade ago.

Morgan Stanley’s wealth and investment management businesses already account for 40-50% of the bank’s revenue. Adding Eaton Vance would nearly double assets under management within the investment management division compared with June 30 and boost the business’s annual revenue by about one-third. “Eaton Vance is a perfect fit,” Gorman said.

Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 Morgan Stanley

Morgan Stanley Finds Money in the Cushion

October 8, 2020

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Morgan Stanley’s

MS 0.60%

deal to acquire

Eaton Vance

EV 48.14%

isn’t a steal. It still might prove to be a very good business decision.

The timing of the transaction is interesting: Morgan Stanley said it has been looking at this deal for several years, and Eaton Vance wasn’t trading at a huge discount to where it has been over that period of time—only 5% below its five-year average share price as of Wednesday.

But among things that have changed recently are some in Washington. For a long time running, an investor concern around Morgan Stanley was that the Federal Reserve’s shift to a new way of determining capital requirements would increase the bank’s required minimum. Instead, Morgan Stanley did relatively well in this year’s stress test, and its new requirements actually came in lower than many analysts had anticipated based on prior exams.

Meanwhile, Morgan Stanley and peers

Morgan Stanley to Buy Eaton Vance for $7 Billion

October 8, 2020

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Morgan Stanley

MS 0.60%

said it is buying fund manager

Eaton Vance Corp.

EV 48.14%

for $7 billion, continuing the Wall Street firm’s shift toward safer businesses like money management.

Its pivot mirrors a broader shift in power and profits on Wall Street. The trading profits of the 2000s are long gone, sapped by new regulations and shifting investor preferences. Asset management, which produces steady fees and requires little capital to run, has become a priority for banks including

Goldman Sachs Group Inc.

and

JPMorgan Chase

& Co.

Morgan Stanley is a midsize player in that space, too small to reap the cost savings of being a giant like

BlackRock Inc.

but too big to credibly style itself a boutique. By acquiring Eaton Vance, it will join the club of $1 trillion money managers and bulk up in specific products where it is weaker, such as municipal bonds and sustainable

Morgan Stanley Reiterates Overweight Rating on Shares of PepsiCo

October 8, 2020

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On Wednesday, analysts at Morgan Stanley reiterated their Overweight rating on PepsiCo (PEP) after the beverage company released strong Q3 results.

The analysts indicated that PepsiCo’s stock has underperformed defensive peers because it’s not a true COVID-beneficiary given the weakness in on-premise beverages (think bars and restaurants). Additionally, it’s not a full cyclical post-recovery story given that more than two-thirds of its profit comes from the snacks/food business. Given that, investors played a barbell approach to COVID with exposure to both COVID-beneficiaries and COVID-recovery names and PEP falling in the middle, i.e, flying under the radar given the intense barbell focus.

Analyst view this level of underperformance as too severe for two reasons: “(1) [They] believe PEP organic topline growth outperformance vs. US centric food peers will re-emerge in 2021, supported by (2) PEP’s US scanner data in the last 12 weeks holding up better sequentially than US centric food

Morgan Stanley buying Eaton Vance in deal valued at $7B

October 8, 2020

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Morgan Stanley is buying Eaton Vance in a deal valued at about $7 billion

October 8, 2020, 1:01 PM

2 min read

NEW YORK — Morgan Stanley will buy the investment management firm Eaton Vance in a deal valued at about $7 billion.

Morgan Stanley has actively gone after potential targets this year. The prosed acquisition Thursday comes just days after it closed on one of the biggest deals on Wall Street since the 2008 financial crisis, the $13 billion takeover of E-Trade Financial.

Eaton Vance, based in Boston, has over $500 billion in assets under management.

Morgan Stanley Chairman and CEO James P. Gorman said in a prepared statement Thursday that Eaton Vance will add more fee-based revenues to its investment banking and institutional securities franchise. The deal will give Morgan Stanley’s investment management arm approximately $1.2 trillion of

Billionaire Packer Says He Didn’t Consider Stanley Ho Ban in Melco Deal

October 7, 2020

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(Bloomberg) —

Crown Resorts Ltd.’s billionaire shareholder James Packer pushed for a tie-up last year between Australia’s biggest casino operator and Hong Kong-based Melco Resorts & Entertainment Ltd.

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This was despite prohibitions levied by an Australian regulator against associates of Macau casino tycoon Stanley Ho — whose son Lawrence is Melco’s CEO — from owning a stake in Crown.

Packer on Wednesday said that he had “forgotten” about the conditions on Crown’s license to operate a casino in Sydney. Pressed further, Packer conceded it was probable that his mind didn’t turn to the prohibition.

The acknowledgment came during Packer’s second day of testimony in a probe of alleged money-laundering activities at Crown. Among other issues, the inquiry is assessing whether Crown’s Melco links breached terms of its license to operate a casino in Sydney.

Packer and Lawrence Ho briefly considered a full merger

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