Morgan Stanley to buy Canadian employee stock manager Solium for $1.1 billion â€” a 43% premium
|National Post 11 Feb 2019 at 07:03|
Morgan Stanley agreed to buy Solium Capital Inc. in a bid to add younger clients and tech startups to its stock-plan administration business.
The firm will pay $19.15 a share in cash, according to a statement Monday, or about 43 per cent higher than Soliumâ€™s closing price on Friday. The agreement values Solium at about $1.1 billion (US$900 million).
Morgan Stanley will add Calgary-based Soliumâ€™s 3,000 stock-plan clients and 1 million participants to its rival offering, which has 320 clients and 1.5 million participants. Soliumâ€™s clients include such startups as Stripe Inc., Instacart Inc. and Shopify Inc., giving Morgan Stanleyâ€™s investment bankers a chance to pitch those firms capital-raising ideas, while its advisers court tech workers as they start to accumulate wealth.
The large premium Morgan Stanley agreed to pay â€śmight raise a brow, but we think this makes significant strategic sense,â€ť analysts at Evercore ISI said in a note, adding that the link-up â€śprovides a real path towards the organic growth and next generation of clients that many investors have been questioning.â€ť
Shares of Morgan Stanley rose 0.9 per cent to US$41.17 in early trading at 9:07 a.m.
The Wall Street bank entered into a partnership with Solium in 2016 to administer equity-compensation plans for its corporate clients and their employees. The deal announced Monday wonâ€™t affect Morgan Stanleyâ€™s buyback plans, and is expected to be completed in the second quarter, according to the statement.
â€śThe acquisition provides Morgan Stanley with broader access to corporate clients and a direct channel to their employees, as well as a greater opportunity to establish and develop relationships with a younger demographic and service this population early in their wealth accumulation years,â€ť Chief Executive Officer James Gorman said in the statement.
Canadian heavy crude has become too expensive to ship by rail
Core earnings for the fourth quarter from its mining and metallurgy unit could slip to a loss of up to $350 million, SNC says
While Krugman doesn t expect a crisis of the magnitude of 2008, he said policy makers in Washington would struggle to contain large shocks