State Street to Acquire Investor Services Business of Brown Brothers Harriman for $ 3.5 Billion in Cash

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State Street Corp. STT,
+ 1.11%
on Tuesday said it had reached a deal to acquire the investor services business of Brown Brothers Harriman for $ 3.5 billion in cash. The deal includes BBH’s custody, accounting, fund administration, global markets and technology services, and is expected to be concluded by the end of the year. BBH will continue to own and operate its private banking and investment management businesses, while employees in its investor services business will move to State Street, and Seán Páircéir, currently a partner and global head of investor services at BBH , will join the State Street Board of Directors. The agreement is expected to “advance State Street’s strategy as a provider of enterprise outsourcing solutions by creating the world’s number one asset services company, strengthening competitive positioning, expanding geographic coverage and improving customer experience, ”the company said in a statement. The deal is expected to increase State Street’s earnings per share in the first year after closing. It will generate cost synergies of $ 260 million in the third year. The transaction will be financed by the issuance of ordinary shares, the suspension of a share buyback program and the available cash. State Street shares have risen 1.4% pre-market and gained 28% in the year to date, while the S&P 500 SPX,
+ 0.75%
gained 20.8%.


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