8-KMaterial AgreementsExhibits & Filings

MORGAN STANLEY 8-K Report, Material Agreement (Feb 21, 2020)

Filed February 21, 2020For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley announced a significant strategic move on February 20, 2020, by entering into an Agreement and Plan of Merger to acquire E*TRADE Financial Corporation. This transaction, structured as a merger of E*TRADE into a Morgan Stanley subsidiary, is set to create a combined entity with enhanced capabilities in wealth management and digital investing. The deal is an all-stock transaction, where E*TRADE shareholders will receive 1.0432 shares of Morgan Stanley common stock for each E*TRADE share they own, along with the conversion of E*TRADE preferred stock into comparable Morgan Stanley preferred stock. This acquisition is a key step in Morgan Stanley's strategy to expand its reach and service offerings in the digital brokerage and wealth management sectors.

Key Highlights

  • 1Morgan Stanley entered into a definitive Agreement and Plan of Merger with E*TRADE Financial Corporation on February 20, 2020.
  • 2The acquisition is an all-stock deal, with E*TRADE shareholders to receive 1.0432 shares of Morgan Stanley common stock per E*TRADE share.
  • 3E*TRADE's preferred stock will be converted into equivalent Morgan Stanley preferred stock.
  • 4The merger is structured to be treated as a reorganization for U.S. federal income tax purposes.
  • 5The transaction is subject to customary closing conditions, including E*TRADE shareholder approval and regulatory clearances.
  • 6Both companies have agreed to customary covenants, including E*TRADE operating in the ordinary course of business prior to closing.
  • 7Termination fees are stipulated, with a $375 million fee payable by E*TRADE to Morgan Stanley under certain conditions, and a $525 million fee payable by Morgan Stanley to E*TRADE if antitrust approvals are not obtained.

Frequently Asked Questions

This 8-K filing announces Morgan Stanley's entry into a material definitive agreement to merge with E*TRADE Financial Corporation. It details the terms of the merger, including the consideration to be paid to E*TRADE shareholders, and outlines the conditions and covenants associated with the transaction.

E*TRADE shareholders will receive 1.0432 shares of Morgan Stanley common stock for each share of E*TRADE common stock they hold. E*TRADE preferred stock will be converted into newly created series of Morgan Stanley preferred stock with comparable rights and preferences.

The merger is subject to several conditions, including the approval of the merger agreement by E*TRADE shareholders, the absence of any legal or regulatory prohibitions, receipt of necessary governmental approvals (including antitrust clearances), and the accuracy of representations and warranties, among others. Neither party can experience a material adverse effect.

While this filing primarily details the transaction structure, the acquisition of E*TRADE is a strategic move by Morgan Stanley to significantly expand its presence in wealth management and digital brokerage. Investors should look for further details in subsequent filings regarding the financial projections, expected synergies, and the impact on Morgan Stanley's balance sheet and earnings.