{"id":534552,"date":"2021-09-07T06:26:10","date_gmt":"2021-09-07T10:26:10","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/state-street-to-acquire-brown-brothers-harriman-investor-services\/"},"modified":"2021-09-07T06:26:10","modified_gmt":"2021-09-07T10:26:10","slug":"state-street-to-acquire-brown-brothers-harriman-investor-services","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/state-street-to-acquire-brown-brothers-harriman-investor-services\/","title":{"rendered":"State Street to Acquire Brown Brothers Harriman Investor Services"},"content":{"rendered":"

<\/p>\n

State Street to Acquire Brown Brothers Harriman Investor Services<\/b><\/p>\n

State Street Will Become the World\u2019s #1 Provider of Asset Servicing<\/b>1<\/span><\/sup><\/p>\n

Brings Together Two Premier Businesses with Significant Scale to Drive Benefits for Clients and Shareholders<\/b><\/p>\n

Earnings Accretion Expected in Year 1<\/b>2<\/span><\/sup><\/p>\n

State Street Increases Pre-Tax Margin Medium-Term Financial Target<\/b><\/p>\n

BOSTON & NEW YORK–(BUSINESS WIRE<\/a>)–
\nState Street Corporation (NYSE: STT) and Brown Brothers Harriman & Co. (BBH) today announced that they have entered into a definitive agreement for State Street to acquire BBH\u2019s Investor Services business, including its custody, accounting, fund administration, global markets and technology services, for $3.5 billion in cash. Following the transaction, BBH will continue to independently own and operate its separate Private Banking and Investment Management businesses. The parties are targeting year-end 2021 to complete the acquisition, subject to regulatory approvals and customary closing conditions.\n<\/p>\n

This press release features multimedia. View the full release here: https:\/\/www.businesswire.com\/news\/home\/20210907005344\/en\/<\/a><\/p>\n

\nBBH Investor Services is a global asset servicer with a track record of exceptional client service and deep expertise in cross-border, alternatives, ETFs, and other high-growth asset classes. As of June 30, 2021, BBH Investor Services had $5.4 trillion in Assets Under Custody (AUC), adding to State Street\u2019s $31.9 trillion in AUC.3<\/sup><\/p>\n

\nThe acquisition is expected to advance State Street\u2019s strategy as an enterprise outsource solutions provider by creating the number one asset servicer globally,1<\/sup> strengthening competitive positioning, expanding geographic coverage and enhancing client experience.\n<\/p>\n

\n\u201cThe Investment Servicing industry enjoys strong fundamentals as worldwide growth in financial assets drives industry revenues. This combination with BBH Investor Services helps us consolidate our position as the industry innovator and leader,\u201d said Ron O’Hanley, Chairman and Chief Executive Officer of State Street Corporation. \u201cWe are enhancing our leadership position across a range of services, augmenting our position in a number of key markets, growing relationships with many of the leading global asset managers and owners, and increasing our capabilities and scale. Additionally, BBH Investor Services brings us strong talent, including industry leading service excellence and quality execution.\u201d\n<\/p>\n

\n\u201cWe made this decision after careful consideration of the current and future landscape of the global securities servicing industry, including how best to support and innovate for the growing breadth and complexity of our clients\u2019 servicing requirements,\u201d said Bill Tyree, managing partner of BBH. \u201cState Street is the ideal partner \u2013 a firm that shares our core values of unmatched client service, integrity, trust, and a long-term commitment to sustainability.\u201d\n<\/p>\n

\nUpon closing of the transaction, BBH Investor Services employees will move to State Street. The senior management team will transition to State Street in executive leadership roles, and Se\u00e1n P\u00e1irc\u00e9ir, currently partner and Global Head of Investor Services at BBH, will join State Street\u2019s Management Committee.\n<\/p>\n

Transaction Details<\/b><\/p>\n

\nThe acquisition creates meaningful shareholder value by increasing State Street\u2019s earnings growth potential and its pre-tax margin medium-term target. As a result of the anticipated earnings growth from this transaction, State Street is now targeting an increased pre-tax margin of 31%.4<\/sup><\/p>\n

\nPost close, the transaction provides the potential for significant benefits for State Street shareholders from estimated fully-phased in expense synergies5<\/sup> of $260 million in year 3 as a result of efficiencies in operational systems and infrastructure, as well as overhead consolidation. Additionally, State Street has identified an estimated $35 million of EBIT from known balance sheet actions and $40 million of EBIT from estimated net revenue synergies5<\/sup> in Investment Servicing and Global Markets in year 3.\n<\/p>\n

\nState Street expects the transaction will be primarily financed through the issuance of common equity, the suspension of common share repurchases before resuming during 2Q22, and cash on hand. The acquisition is expected to be accretive to earnings per share in year 1.2<\/sup><\/p>\n

Propels State Street\u2019s Core Strategy <\/b><\/p>\n

\nLeveraging the best technology and capabilities from each company will enhance State Street\u2019s current set of product solutions for new and existing clients. BBH Investor Services brings innovative data connectivity tools to the broad marketplace that will be additive to State Street\u2019s product suite and provides a toolset that represents an important enhancement to its service offering. BBH Investor Services\u2019 Infomediary\u00ae platform, which facilitates data transmission and integration among buy-side and sell-side systems, will also support the State Street AlphaSM<\/sup> platform and facilitate integration of clients onto the platform while mitigating future development cost. Adding BBH Investor Services\u2019 list of premier clients to State Street will also expand the base of potential users of State Street Alpha.\n<\/p>\n

\nThe addition of BBH Investor Services will further State Street’s strategic goal of expanding and deepening its presence in key non-US markets, including developed markets such as Japan, Luxembourg, and Ireland, as well as Latin America, which State Street has targeted for growth.\n<\/p>\n

Client Focused Organization with Deep Expertise <\/b><\/p>\n

\nThe transaction will also add additional depth to State Street\u2019s expertise in relationship management, client service, operations and technology that can be integrated across all of State Street\u2019s global client segments.\n<\/p>\n

\n\u201cOne of the most attractive elements for us is BBH Investor Services\u2019 first-rate talent and team of professionals with client service excellence, which strengthens our value proposition and is completely aligned with our focus and vision of being our clients\u2019 enterprise outsourcer and essential partner,\u201d added O\u2019Hanley.\n<\/p>\n

\n\u201cWe found in State Street a partner who shares our singular focus on delivering exceptional client outcomes, without exception,\u201d said P\u00e1irc\u00e9ir, head of BBH Investor Services. \u201cWe are committed to adopting best practices from both organizations to create an unmatched offering for the world\u2019s most sophisticated asset managers and financial institutions.\u201d\n<\/p>\n

\nGoldman Sachs & Co. LLC served as financial advisor and Davis Polk & Wardwell LLP served as legal advisor to State Street in connection with the transaction. Lazard served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to BBH in connection with the transaction.\n<\/p>\n

Conference Call<\/b><\/p>\n

\nA conference call to discuss the proposed acquisition will be held at 8:00 a.m. ET today, on Tuesday, September 7, 2021. The call will be open to the public. A webcast of the conference call will be accessible on State Street\u2019s Investor Relations website, http:\/\/investors.statestreet.com<\/a>, and by telephone at (866) 211-3118 or (647) 689-6605 (Conference ID# 9389324). A replay of the conference call will be available for approximately two weeks following the conference call on State Street\u2019s Investor Relations website, http:\/\/investors.statestreet.com<\/a>, and by telephone at (800) 585-8367 or (416) 621-4642 (Conference ID# 9389324).\n<\/p>\n

About State Street Corporation<\/b><\/p>\n

\nState Street Corporation (NYSE: STT) is one of the world’s leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $42.6 trillion in assets under custody and\/or administration and $3.9 trillion* in assets under management as of June 30, 2021, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street’s website at www.statestreet.com<\/a>.\n<\/p>\n

*Assets under management as of June 30, 2021 includes approximately $64 billion of assets with respect to SPDR\u00ae products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.<\/i><\/p>\n

About Brown Brothers Harriman<\/b><\/p>\n

\nBBH is a privately-held, global financial services firm founded in 1818 and headquartered in New York City. It counts among its clients institutions, privately-held companies, families and wealthy individuals which it serves through its three business lines: Investor Services, Investment Management and Private Banking. The firm is known for its advanced technology, exceptional client service and selectivity.\n<\/p>\n

\nBBH\u2019s Investor Services business provides cross-border custody, accounting, administration, execution and technology services to many of the world\u2019s leading asset managers and financial institutions. BBH\u2019s Investment Management and Private Banking businesses manage public and private securities portfolios, advise banking clients on strategic direction, provide debt financing and banking services and offer trust and estate services.\n<\/p>\n

\nBBH, including BBH Investor Services, operates in over 90 markets worldwide from 17 offices. BBH employs approximately 6,000 professionals. For more information, please visit www.bbh.com<\/a>.\n<\/p>\n

Endnotes<\/b><\/p>\n

    \n
  1. \nWorld\u2019s #1 provider of asset servicing based on AUC. Source: Global Custodian, State Street, and BBH Investor Services internal analysis as of quarter-end 2Q21 excluding central securities depositories. AUC for BBH and certain peers based on internal analysis. State Street as reported based on Global Custodian. Also see endnote 3.\n<\/li>\n
  2. \nExpected earnings per share (EPS) accretion does not reflect estimated acquisition and restructuring costs. This is a non-GAAP presentation. See the slide presentation available on State Street’s Investor Relations website and included in the presentation materials referenced above under “Conference Call” for a description of State Street’s use of non-GAAP measures and related information. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in conformity with GAAP.\n<\/li>\n
  3. \nAs of June 30, 2021, Assets Under Custody and\/or Administration (AUC\/A) for State Street was $42.6 trillion.\n<\/li>\n
  4. \nMedium-term financial targets to be met by the end of 2023 or on a run-rate basis for FY2024. Pre-tax margin target assumes the closing of the announced acquisition of BBH Investor Services on December 31, 2021 (which closing is subject to regulatory approvals and customary closing conditions).\n<\/li>\n
  5. \nGross cost synergies represent the reduction in pre-tax expenses achieved in a given year relative to 2020. Cost synergies are on an EBIT basis and do not reflect acquisition and restructuring costs. Revenue synergies primarily represent opportunities to provide access to State Street\u2019s broader range of FX products and platforms, expand share of wallet with clients and to redirect cash and deposits onto State Street\u2019s balance sheet. Revenue synergies are on an EBIT basis and are net of associated incremental operating costs.\n<\/li>\n<\/ol>\n

    FORWARD-LOOKING STATEMENTS<\/b><\/p>\n

    \nThis News Release (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about State Street\u2019s planned acquisition of BBH\u2019s Investor Services business and related business, financial, capital, staffing and operational effects and considerations.\n<\/p>\n

    \nForward-looking statements are often, but not always, identified by such forward-looking terminology as \u201cwill\u201d \u201cexpect,\u201d \u201ctarget,\u201d \u201cestimate,\u201d \u201cpotential,\u201d \u201cplan,\u201d \u201ccan,\u201d \u201coutlook,\u201d \u201cguidance,\u201d \u201cpriority,\u201d \u201cobjective,\u201d \u201cintend,\u201d \u201cforecast,\u201d \u201cbelieve,\u201d \u201canticipate,\u201d \u201cseek,\u201d \u201cmay,\u201d \u201ctrend,\u201d \u201cstrategy\u201d and \u201cgoal,\u201d or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued.\n<\/p>\n

    \nImportant factors that may affect future results and outcomes include, but are not limited to:\n<\/p>\n