Statement from State Street Corporation on Brown Brothers Harriman Investor Services Acquisition
November 30 2022 - 6:46AM
Business Wire
State Street Corporation (NYSE: STT) today announced that it has
mutually agreed with Brown Brothers Harriman & Co. (BBH) to
terminate State Street’s proposed acquisition of BBH’s Investor
Services business.
After consideration of both regulatory feedback and potential
transaction modifications to address that feedback, State Street
has determined that the regulatory path forward would involve
further delays, and all necessary approvals have not been resolved.
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. It would also include delays in the timing
and potential limits to the amount of deal synergies. Therefore, we
have determined 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.
“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,” said Ron O'Hanley, Chairman and Chief
Executive Officer of State Street Corporation. “Since we announced
the proposed acquisition, we maintained our focus on achieving a
transaction that would meet our strategic and financial objectives.
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.”
The Sale and Purchase Agreement does not provide for a
contractual penalty by either State Street or BBH in connection
with this termination.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors
including investment servicing, investment management and
investment research and trading. With $35.7 trillion in assets
under custody and/or administration and $3.3 trillion* in assets
under management as of September 30, 2022, State Street operates
globally in more than 100 geographic markets and employs
approximately 41,000 worldwide. For more information, visit State
Street's website at www.statestreet.com.
*Assets under management as of September 30, 2022 includes
approximately $55 billion of assets with respect to SPDR® products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
FORWARD LOOKING STATEMENTS
This News Release contains forward-looking statements within the
meaning of United States securities laws, including statements
about our goals and expectations regarding our strategy, growth
prospects, capital management, business, financial and capital
condition, results of operations, the financial and market outlook,
effects of terminating the proposed acquisition of the Brown
Brothers Harriman (BBH) Investor Services business and the business
environment. Forward-looking statements are often, but not always,
identified by such forward-looking terminology as “strategy,”
“trajectory,” “will,” “outlook,” "intend," "target," “guidance,”
“expect,” “priority,” “objective,” “plan,” “forecast,” “believe,”
“anticipate,” “estimate,” “seek,” “may,” “trend,” and “goal,” or
similar statements or variations of such terms. These statements
are not guarantees of future performance, are inherently uncertain,
are based on current assumptions that are difficult to predict and
involve a number of risks and uncertainties. Therefore, actual
outcomes and results may differ materially from what is expressed
in those statements, and those statements should not be relied upon
as representing our expectations or beliefs as of any time
subsequent to the time this News Release is first issued.
Important factors that may affect future results and outcomes
include, but are not limited to:
- We are subject to intense competition, which could negatively
affect our profitability;
- We are subject to significant pricing pressure and variability
in our financial results and our AUC/A and AUM;
- Our development and completion of new products and services,
including State Street Digital and State Street AlphaSM, and the
enhancement of our infrastructure required to meet increased
regulatory and client expectations for resiliency and the systems
and process re-engineering necessary to achieve improved
productivity and reduced operating risk, may take an extended
period to implement, involve costs and expose us to increased
risk;
- Our business may be negatively affected by our failure to
update and maintain our technology infrastructure;
- The COVID-19 pandemic continues to exacerbate certain risks and
uncertainties for our business;
- Acquisitions, strategic alliances, joint ventures and
divestitures, and the integration, retention and development of the
benefits of our acquisitions, pose risks for our business;
- Competition for qualified members of our workforce is intense,
and we may not be able to attract and retain the highly skilled
people we need to support our business;
- We could be adversely affected by geopolitical, economic and
market conditions; including, for example, as a result of the
ongoing war in Ukraine, actions taken by central banks to address
inflationary pressures, challenging conditions in global equity
markets, and disruptions in fixed income markets such as those
impacting the UK gilts;
- We have significant International operations, and disruptions
in European and Asian economies could have an adverse effect on our
consolidated results of operations or financial condition;
- Our investment securities portfolio, consolidated financial
condition and consolidated results of operations could be adversely
affected by changes in the financial markets;
- Our business activities expose us to interest rate risk;
- We assume significant credit risk to counterparties, who may
also have substantial financial dependencies with other financial
institutions, and these credit exposures and concentrations could
expose us to financial loss;
- Our fee revenue represents a significant portion of our
consolidated revenue and is subject to decline based on, among
other factors, market conditions, competition, currency valuation
and investment activities of our clients and their business
mix;
- If we are unable to effectively manage our capital and
liquidity, our consolidated financial condition, capital ratios,
results of operations and business prospects could be adversely
affected;
- We may need to raise additional capital or debt in the future,
which may not be available to us or may only be available on
unfavorable terms;
- If we experience a downgrade in our credit ratings, or an
actual or perceived reduction in our financial strength, our
borrowing and capital costs, liquidity and reputation could be
adversely affected;
- Our business and capital-related activities, including common
share repurchases, may be adversely affected by capital and
liquidity standards required as a result of capital stress
testing;
- We face extensive and changing government regulation in the
jurisdictions in which we operate, which may increase our costs and
compliance risks;
- We are subject to enhanced external oversight as a result of
the resolution of prior regulatory or governmental matters;
- Our businesses may be adversely affected by government
enforcement and litigation;
- Any misappropriation of the confidential information we possess
could have an adverse impact on our business and could subject us
to regulatory actions, litigation and other adverse effects;
- Our calculations of risk exposures, total RWA and capital
ratios depend on data inputs, formulae, models, correlations and
assumptions that are subject to change, which could materially
impact our risk exposures, our total RWA and our capital ratios
from period to period;
- Changes in accounting standards may adversely affect our
consolidated financial statements;
- Changes in tax laws, rules or regulations, challenges to our
tax positions and changes in the composition of our pre-tax
earnings may increase our effective tax rate;
- In addition to income tax, we are subject to audit or other
examination, and litigation or other dispute resolution
proceedings, with U.S. and non-U.S. tax authorities regarding
non-income-based tax matters. Our interpretations or application of
tax laws and regulations, including with respect to withholding,
transfer, wage, use, stamp, service and other non-income taxes,
could differ from that of the relevant governmental taxing
authority, or we may experience timing or other compliance
deficiencies in connection with our efforts to comply with
applicable tax laws and regulations, which could result in the
requirement to pay additional taxes, penalties and/or interest,
which could be material;
- The transition away from LIBOR may result in additional costs
and increased risk exposure;
- Our control environment may be inadequate, fail or be
circumvented, and operational risks could adversely affect our
consolidated results of operations;
- Cost shifting to non-U.S. jurisdictions and outsourcing may
expose us to increased operational risk, geopolitical risk and
reputational harm and may not result in expected cost savings;
- Attacks or unauthorized access to our information technology
systems or facilities, or those of the third parties with which we
do business, or disruptions to our or their continuous operations,
could result in significant costs, reputational damage and impacts
on our business activities;
- Long-term contracts expose us to pricing and performance
risk;
- Our businesses may be negatively affected by adverse publicity
or other reputational harm;
- We may not be able to protect our intellectual property;
- The quantitative models we use to manage our business may
contain errors that could result in material harm;
- Our reputation and business prospects may be damaged if our
clients incur substantial losses or are restricted in redeeming
their interests in investment pools that we sponsor or manage;
- The impacts of climate change, and regulatory responses to such
risks, could adversely affect us; and
- We may incur losses as a result of unforeseen events including
terrorist attacks, natural disasters, the emergence of a new
pandemic or acts of embezzlement.
Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in our 2021 Annual Report on Form 10-K and
our subsequent SEC filings. We encourage investors to read these
filings, particularly the sections on risk factors, for additional
information with respect to any forward-looking statements and
prior to making any investment decision. The forward-looking
statements contained in this News Release should not by relied on
as representing our expectations or beliefs as of any time
subsequent to the time this News Release is first issued, and we do
not undertake efforts to revise those forward-looking statements to
reflect events after that time.
© 2022 State Street Corporation - All Rights Reserved
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version on businesswire.com: https://www.businesswire.com/news/home/20221130005581/en/
Media Relations Contacts: Ed Patterson +1 404 213
3106 epatterson@statestreet.com Carolyn Cichon + 1 617 664
8672 ccichon@statestreet.com Investor Relations Contact:
Ilene Fiszel Bieler +1 617-664-3477
ifiszelbieler@statestreet.com
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