Morgan Stanley (NYSE:MS) completed the acquisition of E*TRADE Financial Corporation from a group of shareholders.
Mike Pizzi, Chief Executive Officer of E*TRADE, will be joining Morgan Stanley reporting to James Gorman, Chairman and Chief Executive Officer of Morgan Stanley and he will continue to run the E*TRADE business within the Morgan Stanley franchise and lead the ongoing integration effort and will join the Morgan Stanley Operating and Management Committees. In addition, one member of E*TRADE Board is expected to be added to the Morgan Stanley Board of Directors. E*TRADE brand will be retained as part of the transaction. The acquisition is subject to customary closing conditions, including regulatory approvals, most notably, the Federal Reserve and the OCC, the early termination or expiration of any applicable waiting period or periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval by E*TRADE shareholders and registration statement shall have been declared effective, the shares of Morgan Stanley stock to be issued shall have been approved for listing on the NYSE, subject to official notice of issuance. The transaction has been unanimously approved by the Boards of E*TRADE Financial and Morgan Stanley. As of March 30, 2020, Department of Justice's (DoJ) antitrust division approved the transaction. As of May 1, 2020, the Federal Reserve Board extended the public comment period until June 4, 2020. As of June 2, 2020, E*TRADE Financial Corporation shareholders meeting date is July 17, 2020. As of July 6, 2020, Board of E*TRADE recommended stockholders to vote in favor of the transaction. As per filing on July 17, 2020 the shareholders of E*TRADE approved the transaction in the special meeting of E*TRADE shareholders. More than 99% of votes were cast in favor of the proposal. Morgan Stanley expects the acquisition to be accretive once fully phased-in estimated cost and funding synergies are realized. The transaction is expected to increase the Firm's return on tangible common equity by more than 100 bps with fully phased-in cost and funding synergies and improve Wealth Management's pre-tax profit margin to over 30%. The transaction is also expected to be dilutive to Tangible book value per share, offset to ROTCE once estimated cost and funding synergies are realized. As of June 12, 2020, the merger may not be accretive, and may be dilutive, to Morgan Stanley's earnings per share. Morgan Stanley will maintain its strong capital position, with the Firm's common equity tier 1 ratio estimated to increase by over 30 bps at closing.
Neill Barr, Marc O. Williams, Brian Wolfe, Kyoko Takahashi Lin, Arthur J. Burke, Michael Mollerus, Randall Guynn, Zachary J. Zweihorn and Luigi L. De Ghenghi of Davis Polk & Wardwell LLP acted as the legal advisors to Morgan Stanley as part of the transaction. Stephen F. Arcano, David C. Hepp, Sven Mickisch, Joseph Penko, Edward Gonzalez, Brian Christiansen, Heather Cruz and Kenneth Schwartz of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to E*TRADE Financial Corporation. Ardea Partners LP and J.P. Morgan Securities LLC acted as financial advisors and fairness opinion providers to E*TRADE Financial. Morgan Stanley acted as financial advisor to Morgan Stanley. Broadridge Corporate Issuer Solutions, Inc. and The Bank of New York Mellon acted as transfer agent to Morgan Stanley. American Stock Transfer & Trust Company, LLC acted as transfer agent to E*TRADE. Innisfree M&A Inc. acted as the proxy solicitor to E*TRADE as part of the transaction and will receive a fee expected not to exceed $25,000, plus reasonable out-of-pocket expenses, for the services rendered. For financial advisory services rendered in connection with the Merger, E*TRADE has agreed to pay J.P. Morgan a total fee in the amount equal to 62 basis points of the total consideration at closing, $10 million of which became payable upon delivery by J.P. Morgan of its opinion, and the remainder of which will become due upon the closing of the proposed merger. Based on the trading price of Morgan Stanley common stock at the close of business prior to the transaction announcement on February 20, 2020, J.P. Morgan's total fee was estimated to be approximately $81 million, of which $10 million of which became payable upon delivery of its opinion. The engagement letter between E*TRADE and Ardea provides for a transaction fee of 15 basis points of the total actual consideration to be received by the holders of E*TRADE common stock pursuant to the merger agreement, that is estimated, based on the information available as of the date of announcement, to be approximately $20 million, $1 million of which became payable upon the execution of the engagement letter, $2 million of which became payable upon the execution of the merger agreement and the remainder of which is payable contingent upon completion of the proposed merger.
Morgan Stanley (NYSE:MS) completed the acquisition of E*TRADE Financial Corporation (NASDAQ:ETFC) ("Company") from a group of shareholders on October 1, 2020. Post-closing, E*TRADE Financ