Northern Trust on Acquisition Spree - Analyst Blog
May 18 2011 - 8:00AM
Zacks
Northern Trust Corporation (NTRS) is on an
acquisition spree. The latest acquisition that the company has
agreed to is that of Omnium LLC, a leading hedge fund
administrator, from Citadel. The acquisition of Omnium, which has
around $70 billion in assets under administration, will enhance
Northern Trust’s capabilities and create an industry-leading hedge
fund administration platform for institutional investors.
The deal is subject to regulatory approvalsand customary closing
conditions, and is expected to close by the third quarter of 2011.
Northern would pay at least $100 million for this acquisition and
according to its spokesman, the purchase price could go over $100
million as it would correlate with Omnium’s performance.
Omnium will be integrated into Northern Trust’s Corporate &
Institutional Services business unit as Northern Trust Hedge Fund
Services, LLC. It will provide comprehensive administrative and
middle office services including trade processing, valuation,
real-time reporting, cash management, accounting, collateral
management and investor servicing to hedge funds and large
institutional investors.
Northern Trust has made investments in businesses to serve its
clients in the U.S. and around the world uninterruptedly. In
December 2010, Northern Trust announced the acquisition of
Waterline Partners, a top ranked investment advisory firm based in
Los Angeles. The company expects Waterline to work in conjunction
with the client-focused strategy of Northern Trust, and strengthen
the company’s presence on the west coast of the United States.
Further, in February 2011, Northern Trust acquired the fund
administration, investment operations outsourcing and custody
business of Bank of Ireland Group. We expect Northern Trust to
benefit from the synergies anticipated from such acquisitions.
Besides Northern Trust, its rivals such as State Street
Corp. (STT) and The Bank of New York Mellon
Corporation (BK) have been active acquirers in the past
two years.
Recently, BNY Mellon Corp.announced a deal to acquire
Chicago-based Talon Asset Management’s wealth management business,
which has over $800 million in asset under management. Last year,
BNY Mellon had acquired PNC Financial Services Group
Inc.’s (PNC) Global Investment Servicing business,
Germany's BHF Asset Servicing GmbH, and Toronto-based I3 Advisors.
Last year, State Street had acquired Italy’s Intesa Sanpaolo’s
Securities Services business and in 2009 it acquired Channel
Islands’ based Mourant International Finance.
We expect increased asset management and servicing fees based on
improvements in equity markets and higher volumes to benefit
Northern Trust. However, the Dodd-Frank Act will ring in numerous
regulatory changes over the next several years, which might act as
a deterrent to the company’s fundamentals. As of March 31, 2011,
Northern Trust had $4.4 trillion in assets under custody and $662.2
billion in assets under management.
Northern Trust currently retains a Zacks #4 Rank, which
translates into a short-term ‘Sell’ rating.
BANK OF NY MELL (BK): Free Stock Analysis Report
NORTHERN TRUST (NTRS): Free Stock Analysis Report
PNC FINL SVC CP (PNC): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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