State Street Corp.
said Tuesday it has entered an agreement to acquire Brown Brothers Harriman’s Investor Services business for $3.5 billion in cash. The deal includes BBH’s custody, accounting, fund administration, global markets and technology services, and is expected to close by year-end. BBH will continue to own and operate its private banking and investment management businesses, while employees at its Investor Services business will move to State Street, and Seán Páircéir, currently partner and Global Head of Investor Services at BBH, will join State Street’s Management Committee. The deal is expected “to advance State Street’s strategy as an enterprise outsource solutions provider by creating the number one asset servicer globally,1 strengthening competitive positioning, expanding geographic coverage and enhancing client experience,” the company said in a statement. The deal is expected to boost State Street’s per-share earnings in the first year after close. It will generate cost synergies of $260 million in year three. The deal will be financed by issuing common stock, suspending a share buyback program and with cash on hand. State Street shares rose 1.4% premarket and have gained 28% in the year to date, while the S&P 500
has gained 20.8%.