State Street Corporation 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.

Source: State Street

We have mutually agreed with State Street to terminate our agreement to sell our InServ business. This isn’t the outcome we planned but we believe it’s the right decision for our clients, employees & business. We have no plan to pursue another transaction. https://t.co/r7mw9QaNTJ

— Brown Brothers Harriman (@bbh) November 30, 2022

BBH Announces Termination of Investor Services Transaction with State Street

BBH will continue to invest in the people, technologies, and market segments that make Investor Services a differentiated and valued offering for the world’s most sophisticated institutional investors

Brown Brothers Harriman & Co. (BBH) announced that it has mutually agreed with State Street to terminate the agreement to sell its Investor Services business to State Street Corporation. BBH made this decision after it became clear that State Street will be unable to obtain necessary approvals from its regulators for the agreed transaction.

“It is disappointing that State Street’s inability to secure regulatory approval precluded the compelling vision that they brought to us,” said Bill Tyree, Managing Partner of BBH. “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.”

Tyree continued, “BBH has achieved its differentiated market position as a result of deep subject matter expertise, unmatched client service, global coordination, and high automation. Going forward, our clients can expect more of the same. We will continue to invest in the people, technologies, and select market segments that are unique to BBH. These remarkable resources remain intact at BBH, and we are as dedicated as ever to helping clients meet their goals.”

BBH’s Partner responsible for Investor Services, Sean Páircéir, added, “We validated over the past year that there is a unique place for BBH in the asset servicing industry. Our position as a specialized player and premium service provider remains a valued, differentiated choice among the world’s most sophisticated and discerning institutional investors. I remain extremely confident in BBH and the Investor Services business’ ability to deliver for our clients.”

The Investor Services business, including associated technology, geographic scope, competitive dynamics, and regulation, has evolved continuously.  BBH’s cultural competence for adaptation and innovation has endured for over 200 years and is reflected in a leadership team that is unsurpassed in tenure and experience in the securities servicing industry.

Source: BBH