U.S. Markets open in 2 hrs 37 mins

Morgan Stanley (MS) Agrees to Buy Canada's Solium Capital

Zacks Equity Research

Morgan Stanley MS has agreed to acquire Solium Capital Inc., a leading Canadian employee stock plans manager for C$1.1 billion ($900 million). The transaction, which is expected to be completed in the second quarter of 2019, will only have a minimal impact on Morgan Stanley’s earnings and capital ratios.

Per the deal, Morgan Stanley will buy all of the issued and outstanding common shares of Solium for C$19.15 per share in cash. Notably, the transaction will not lead to any adjustments in Morgan Stanley’s share repurchases in the first or second quarter of 2019, which were included as part of the company’s 2018 Capital Plan.

Being a provider of software-as-a-service for equity administration, financial reporting and compliance, Solium offers stock plans for over 3,000 companies, including Instacart, Levi Strauss, Shopify, Stripe and others.

Alternatively, Morgan Stanley currently provides stock plans to nearly 320 clients, with almost 1.5 million participants. This acquisition will help in bringing Solium’s major stock plan administration platform together with the leading Wealth Management business, thereby, positioning Morgan Stanley to become an industry leader in Workplace Wealth Solutions.

Morgan Stanley’s chairman and CEO, James Gorman stated, “The 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.”

Andy Saperstein, co-head of Morgan Stanley’s Wealth Management business said, “By combining stock plan administration, 401(k), other forms of deferred compensation, employee Financial Wellness education and our core Goals-Based Planning technology, we plan to create an integrated ‘Morgan Stanley Wealth Portal,’ which will offer employers the opportunity to deliver tailored financial counseling and industry leading advice to their employees.”

Notably, with this acquisition, Morgan Stanley will be able to enhance its client acquisition efforts so as to complement the Financial Advisor channel. The company has been trying to build a comprehensive suite of digital tools that can support expansion within the Workplace Wealth marketplace.

Over the past year, Morgan Stanley’s shares have lost 24.7% compared with 19.2% decline recorded by the industry.

Currently, Morgan Stanley carries a Zacks Rank #3 (Hold).

Stocks Worth a Look

A few better-ranked stocks from the same space are Evercore Inc. EVR, LPL Financial Holdings Inc. LPLA and Stifel Financial Corp. SF. Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 30 days, Evercore witnessed an upward earnings estimate revision of 1.4% for 2019. Additionally, the stock has gained 12.9% in the past three months.

LPL Financial’s earnings estimates for 2019 have been revised 5.3% upward over the past 30 days. Its shares have gained 22.9% in the past three months.

Over the past 30 days, Stifel Financial’s earnings estimates for 2019 have increased 6.9%. The company’s shares have increased 9% in the past three months.

Zacks' Best Stock-Picking Strategy

It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.

How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.

Free – See the Stocks It Turned Up for Today >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Evercore Inc (EVR) : Free Stock Analysis Report
LPL Financial Holdings Inc. (LPLA) : Free Stock Analysis Report
Stifel Financial Corporation (SF) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research