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State Street To Acquire Brown Brothers Harriman’s Investor Services Business for $3.5 Billion

State Street would become the industry's biggest asset servicing firm.

Video source: YouTube, CNBC Television

State Street Corporation (NYSE: STT - $72.69 1.06 (1.437%)  ) announced it has agreed to acquire the investor services business of investment bank Brown Brothers Harriman & Co (BBH) for $3.5 billion in cash.

Under the terms of the deal announced Tuesday, State Street will acquire BBH’s custody, accounting, fund administration, global markets and technology services operations.

The transaction, which is expected to close by the end of the year, will also give Boston-based State Street access to BBH’s expertise in cross-border, alternatives, exchange-traded funds and other high-growth asset classes, the companies said.

After closing, BBH investor services employees will move to State Street and $5.4 trillion in assets under custody (AUC) will transition to State Street’s books, which already hold $31.9 trillion in AUC.

The Wall Street Journal noted that the combined company will surpass rival Bank of New York Mellon Corp as the money management industry’s biggest servicing firm. 

New York-headquartered BBH will continue to independently own and operate its separate private banking and investment management businesses, the companies said.

State Street chief executive officer and chairman Ron O’Hanley said, “We 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.”

Bill Tyree, managing partner of BBH, said, “We 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’ servicing requirements.”

Tuesday’s announcement comes several months after reports that State Street was exploring multiple options to expand its asset management business, including a merger with a competitor, as it seeks to gain scale.


Source: Equities News

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