Brown Brothers Harriman Throws in the Towel on Custody and Fund Admin Business as State Street Scoops Up
Posted on 09/07/2021
State Street Corporation inked a deal to acquire the Investor Services business of Brown Brothers Harriman & Co. (BBH). This deal includes BBH’s custody, accounting, fund administration, global markets and technology services. The sales price was US$ 3.5 billion in cash. Following the transaction, BBH will continue to independently own and operate its separate Private Banking and Investment Management businesses. The parties are targeting year-end 2021 to complete the acquisition, subject to regulatory approvals and customary closing conditions. Upon closing of the transaction, BBH Investor Services employees will move to State Street. The senior management team will transition to State Street in executive leadership roles, and Seán Páircéir, currently partner and Global Head of Investor Services at BBH, will join State Street’s Management Committee.
BBH Investor Services is a global asset servicer. As of June 30, 2021, BBH Investor Services had US$ 5.4 trillion in Assets Under Custody (AUC), adding to State Street’s US$ 31.9 trillion in AUC. BHH made the choice to get out of the low-margin custody and fund administration business.
State Street expects the transaction will be primarily financed through the issuance of common equity, the suspension of common share repurchases before resuming during second quarter of 2022, and cash on hand. The acquisition is expected to be accretive to earnings per share in year 1.2
Advisors
Goldman Sachs & Co. LLC served as financial advisor and Davis Polk & Wardwell LLP served as legal advisor to State Street in connection with the transaction. Lazard served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to BBH in connection with the transaction.