Morgan Stanley Buying E-Trade for $13B

CBJ — E-Trade is being sold to investment banker Morgan Stanley in a deal reportedly worth US$13 billion. The transaction is expected to close by the fall of this year, pending approval of shareholders and government regulators.

The all-stock deal will see E-Trade shareholders receive Morgan Stanley shares.

E-Trade CEO Mike Pizzi will continue to run the firm once it becomes a division within Morgan Stanley.

“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 prepared statement

Online discount brokerage firms such as E-Trade have battled intensely for new customers ever since Charles Schwab announced it would eliminate the fees it charges customers for trades. Then Charles Schwab and TD Ameritrade teamed up to create a massive online rival for E-Trade.

Morgan Stanley will acquire E-Trade’s $360 billion in assets and 5.2 million customers as part of the merger, which Morgan Stanley can then turn around and use to start making loans.

The deal is expected to close in the fourth quarter of this year, if regulators and shareholders approve it.