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State Street Corporation has mutually agreed with Brown Brothers Harriman (BBH) to terminate State Street’s proposed acquisition of BBH’s Investor Services business.
Considering regulatory feedback and potential transaction modifications, State Street determined that the regulatory path forward would involve further delays, in addition, “all necessary approvals have not been resolved”.
According to the firm, the proposed modified transaction structure was increasingly complex, presented additional operational risk to State Street and would limit the anticipated transaction benefits relative to original expectations.
The acquisition of BBH’s business would have produced delays in the timing and potential limits to the amount of deal synergies, the firm found.
State Street agreed that “it is not in the best interests of clients, shareholders or employees to continue to invest time and resources in the transaction in this challenging financial services M&A environment”.
State Street first announced its decision to acquire BBH in September 2021. The move intended to see the firm take over BBH’s Investor Services business, including its securities lending, custody, accounting, fund administration, global markets and technology services, for US$3.5 billion.
The acquisition was expected to be completed at the end of 2021.
Commenting on the decision, Ron O'Hanley, chairman and CEO of State Street Corporation, says: “From the beginning of our discussions with BBH in 2021, I have been impressed by the quality of the BBH Investor Services business and its people.
“The decision not to proceed with this transaction was not taken lightly and is in no way a reflection of the quality of the BBH franchise. Since we announced the proposed acquisition, we maintained our focus on achieving a transaction that would meet our strategic and financial objectives.”
He concludes: “Our overall strategy is strong and differentiated, and we remain confident in the organic growth trajectory of our business. We will continue to be deliberate in managing our capital in the best interest of our shareholders.”
Bill Tyree, managing partner of BBH, adds: "It is disappointing that State Street's inability to secure regulatory approval precluded the compelling vision that they brought to us.
"That said, we can now move beyond the State Street transaction and return our undivided attention to day-to-day service excellence, to being an employer of choice, and to shaping the many opportunities before us in the interests of our clients and employees. BBH has no other plan to sell the Investor Services business or to pursue another transaction."
