Posted on 02/20/2020 8:02:31 AM PST by Red Badger
Key Points
Morgan Stanley will acquire brokerage firm E-Trade for $13 billion, the companies announced.
The investment bank will pay $58.74 a share in stock for E-Trade in a deal bringing together $3.1 trillion in client assets.
The deal, expected to close in the fourth quarter, follows last year’s $26 billion all-stock purchase of TD Ameritrade by Charles Schwab.
==================================================================
Wall Street investment bank Morgan Stanley will acquire E-Trade for $13 billion, the companies announced Thursday, the latest in a consolidation wave for the brokerage industry that collectively lowered trading commissions to zero last year.
Morgan Stanley will pay $58.74 a share in stock for E-Trade in a deal bringing together $3.1 trillion in client assets. Morgan Stanley shares fell 4% on the proposed purchase, the biggest takeover by a U.S. bank since the financial crisis. E-Trade shares jumped more than 24% to $55.90 per share.
“E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” Morgan Stanley Chairman and CEO James Gorman said in a statement. “In addition, this continues the decade-long transition of our Firm to a more balance sheet light business mix, emphasizing more durable sources of revenue.”
The deal, which is expected to close in the fourth quarter, follows last year’s $26 billion all-stock purchase of TD Ameritrade by Charles Schwab. At the time, analysts speculated E-Trade may be next to find a partner as the discount brokerage industry faces increasing margin pressures from zero commission trading. After Schwab became the first major player to drop online commission fees last October, competitors including Fidelity and E-Trade were forced to follow.
Is zero commission trading doomed now?
I don’t think so, but who knows?....................
It’s all but dead.
Hope not
[Is zero commission trading doomed now?]
I liked those commercials.
I don’t know why they ever stopped.
Was the kid even real?.....................
A fine example of quantitative easing enabling market consolidation. The big players get bigger using their free Yellen bucks becoming even too bigger to fail.
I’m sure Lehman Bros would agree...................
How come mini mike ain’t buying? He’s still got trucks of money despite his wasting $400+ million on the demodrone contest.
That was my first reaction, too. The big fish swallow up the low-cost little fish, then the big fish get the commissions going again.
I had no idea about this: "brokerage industry that collectively lowered trading commissions to zero last year." The ENTIRE industry had ZERO commission? To get to an average of zero, that means that everybody charged zero or there were some negative commissions to offset some positive commissions. How is it possible that the entire industry charged zero?
Not likely because it has become an industry standard. Low transaction costs make it possible, with firms looking to banking and other services for profit.
I read that TDAmeritrade makes ~1/3 of its profits from loaning out the cash sloshing around in the corners of accounts.
Charles Schwab is buying TD Ameritrade who recently bought Scottrade.
Gooble gooble...
#14 I have borrowed money from my broker TDAmeritrade
Lots of margin money... I sincerely hope that my AMD stock goes up and up or I am doomed. Not really, it would have to get to around $20 a share before I am doomed. Currently at $57+
Most discount brokerages have become reliant on banking type activities for their profits, often with investment advisers as allies who bring their customers along. Many affluent individuals and families like the resulting combination of services, which is similar to what private banks provide.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.