Morgan Stanley has agreed to buy Eaton Vance for $7bn (£5.4bn) – a move that will nearly double the size of its investment management business.
Eaton Vance currently has around $500bn in assets under management (AUM). Following the acquisition, Morgan Stanley Investment Management (MSIM) will have AUM of $1.2trn and revenues of over $5bn.
Morgan Stanley said the two businesses were "highly complementary" with limited overlap in investment and distribution capabilities.
Eaton Vance is a strong player in value-added fixed income solutions and ESG investing.
Morgan Stanley said the purchase would allow it to improve returns though increased scale, improved distribution and cost savings, which it estimated to be around $150m.
Morgan Stanley chairman and chief executive officer James Gorman commented on the acquisition. He said: "This transaction further advances our strategic transformation by continuing to add more fee-based revenues to complement our world class investment banking and institutional securities franchise.
"With the addition of Eaton Vance, Morgan Stanley will oversee $4.4 trillion of client assets and AUM across its wealth management and investment management segments."
"Over many years, Eaton Vance has delivered above-market growth by aligning our business with leading trends in asset management," said Eaton Vance chief executive officer Thomas Faust. "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."
Faust added: "Bringing Eaton Vance's leading brands and capabilities under Morgan Stanley creates a uniquely powerful set of investment solutions to serve both institutional and retail clients in the US and internationally."
MSIM head Dan Simkowitz added: "Eaton Vance brings strong brand recognition and high-quality complementary platforms in key secular growth areas, providing numerous incremental opportunities to increase the reach of our asset management franchise and our value proposition for clients.
"These two businesses have limited overlap and are combining from positions of strength to create one of the leading asset managers in the world. We look forward to this partnership."
The transaction has been approved by the voting trust that holds all of the voting common stock of Eaton Vance but is subject to closing conditions and regulatory approval. It is expected to complete in the second quarter of 2021.
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