Acquisition and Restructuring

6 Months Ended

Jun. 30, 2020


NOTE 2—ACQUISITIONS AND RESTRUCTURING

Proposed Merger with Morgan Stanley

On February 20, 2020, the Company entered into the Merger Agreement with Morgan Stanley under which Morgan Stanley will acquire the Company in an all-stock transaction. Under the terms of the agreement, E*TRADE common stockholders will receive 1.0432 Morgan Stanley common shares for each E*TRADE common share. The Company’s shareholders approved the merger on July 17, 2020. The acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to close in the fourth quarter of 2020.

During the three months ended June 30, 2020, the Company incurred $2 million of restructuring and acquisition-related activities expenses. These costs related primarily to legal fees in connection with the proposed merger. During the six months ended June 30, 2020, the Company incurred $18 million of restructuring and acquisition-related activities expenses related primary to investment banking and legal fees in connection with the proposed merger. There were no restructuring and acquisition-related activities expenses during the three or six months ended June 30, 2019.

Gradifi Acquisition

On December 9, 2019, the Company completed its acquisition of Gradifi, a student loan and financial wellness provider, for a purchase price of $30 million. The Company recorded goodwill of $25 million, which includes synergies expected to result from combining operations with Gradifi to enhance the Company's existing product offerings. The Company also recorded technology intangible assets of $3 million, which are subject to amortization over an estimated useful life of six years. During the three months ended March 31, 2020, the Company recorded purchase accounting adjustments which resulted in a net increase in technology intangible assets of $1 million and a corresponding decrease of $1 million to the recorded goodwill.