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

Filed October 8, 2020For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley announced on October 8, 2020, its entry into a definitive Agreement and Plan of Merger to acquire Eaton Vance Corp. This strategic acquisition involves a two-step merger where Eaton Vance will ultimately become a wholly-owned subsidiary of Morgan Stanley. The transaction is valued at approximately $7 billion, with Eaton Vance shareholders receiving a combination of Morgan Stanley common stock and cash, or an all-cash or all-stock alternative at their election. This move significantly expands Morgan Stanley's presence in the asset management industry, particularly in areas like responsible investing and fixed income. The deal is expected to be accretive to Morgan Stanley's earnings per share and to generate substantial cost synergies. The transaction is subject to customary closing conditions, including regulatory approvals and the effectiveness of a Form S-4 registration statement. The acquisition is anticipated to close in the second quarter of 2021.

Key Highlights

  • 1Morgan Stanley is acquiring Eaton Vance Corp. for approximately $7 billion.
  • 2The transaction is structured as a two-step merger, with Eaton Vance becoming a wholly-owned subsidiary of Morgan Stanley.
  • 3Eaton Vance shareholders have the option to receive a mixed consideration of Morgan Stanley stock and cash, all cash, or all stock.
  • 4A special one-time dividend of $4.25 per share will be paid to Eaton Vance shareholders prior to the merger close.
  • 5The acquisition is expected to significantly enhance Morgan Stanley's asset management capabilities, particularly in fixed income and sustainable investing.
  • 6The deal is anticipated to be accretive to Morgan Stanley's earnings per share and generate substantial cost synergies.
  • 7Closing is subject to regulatory approvals, the effectiveness of a Form S-4 registration statement, and other customary conditions, with an expected closing in the second quarter of 2021.

Frequently Asked Questions

This Form 8-K filing announces the entry into a Material Definitive Agreement by Morgan Stanley for the acquisition of Eaton Vance Corp. It details the terms of the merger, the consideration to be paid to Eaton Vance shareholders, and the conditions for closing the transaction.

Eaton Vance shareholders will receive, at their election, either a mixed consideration of Morgan Stanley common stock and cash, an all-cash amount, or an all-stock amount. The exact value depends on the election and the volume-weighted average price of Morgan Stanley's stock leading up to the closing. Additionally, Eaton Vance shareholders will receive a special one-time dividend of $4.25 per share prior to the merger's completion.

The acquisition of Eaton Vance significantly strengthens Morgan Stanley's position in the asset management sector, particularly by adding substantial capabilities in fixed income and sustainable investing. It is expected to broaden Morgan Stanley's product offerings and client base, while also delivering significant cost synergies and contributing positively to earnings per share.

The merger is subject to several conditions, including the expiration or termination of antitrust waiting periods (like Hart-Scott-Rodino), receipt of necessary governmental consents, the effectiveness of Morgan Stanley's Form S-4 registration statement for the shares to be issued, listing approval for the new shares on the NYSE, and the absence of any material adverse effects on either company. Additionally, Morgan Stanley requires consent from clients representing at least 80% of Eaton Vance's aggregate revenue run-rate.