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Citing regulatory feedback and the likely steps needed to address that feedback, Boston-based State Street Corp. has agreed with Brown Brothers Harriman & Co. to terminate the proposed acquisition of BBH’s investor services business.
State Street said in a statement today said it had not resolved everything necessary to receive regulatory approvals and had determined that the regulatory path forward would involve further delays. The custodial bank said it made this determination after considering regulatory feedback and the potential modifications to the transaction that would be needed to address the feedback.
“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 statement said.
State Street had agreed in September 2021 to acquire BBH Investor Services in a deal valued at $3.5 billion. The transaction included BBH Investor Services’ custody, accounting, fund administration, global markets and technology services.
“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,” Ron O’Hanley, State Street’s chairman and CEO, said in the statement. “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.”
State Street said modifying the transaction would delay the timing and possibly limit “the amount of deal synergies.” Citing current challenges in the financial services regulatory market, the custodial bank added that continuing to invest time and resources in the transaction was not in the best interests of clients, shareholders or employees.
“Since we announced the proposed acquisition, we maintained our focus on achieving a transaction that would meet our strategic and financial objectives,” O’Hanley said. “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.”
State Street said the deal did not involve a contractual penalty for State Street or BBH for the termination.
