Source: State Street
State Street Corporation (NYSE: STT), the world's leading provider of financial services to institutional investors, announced today that it has completed the closing of its acquisition of Investors Financial Services (NASDAQ: IFIN).
Under the terms of the transaction, announced on February 5, 2007, Investors Financial Services Corp. shareholders receive 0.906 shares of State Street common stock for each share of Investors Financial Services' common stock held at closing. To complete the transaction, State Street issued approximately 61 million common shares worth approximately $4.2 billion.
Commenting on the acquisition, Ronald E. Logue, State Street chairman and chief executive officer said, "State Street and Investors Financial have invested resources and talent into expanding capabilities beyond basic custody to focus on key value-added services. Our mutual commitment to excellence, combined with an expanded portfolio of services across a global platform, will provide customers with an investment servicing partner that is unique in the industry. We believe that the winners in this business will differentiate themselves with product scope, geographic reach and deep relationships with customers, and we are confident that this acquisition will build on our strengths in these areas."
Joseph (Jay) L. Hooley, vice chairman and head of global investment servicing and investment research and trading at State Street added, "We have an experienced team in place - with employees from both companies - to lead a seamless and swift conversion for our new customers, which we expect to be complete within 18 months. Based on our strong track record of managing transitions and meeting our goals, we are confident that this acquisition will deliver value for our shareholders, customers and employees. We've met with virtually all of the Investors Financial customers, and now we are prepared to offer them an expanded range of global investment services."
On a pro forma basis, the acquisition of Investors Financial adds an additional $2.3 trillion in assets as of March 31, 2007, of which approximately $1.8 trillion is held in custody. On a pro forma basis, State Street would have $14.1 trillion in assets under custody as measured on March 31, 2007.
As previously disclosed, State Street expects the acquisition to be dilutive to operating earnings in 2007, neutral to operating earnings in 2008, accretive to earnings in 2008 on a cash basis, and accretive to operating earnings in 2009, based on anticipated pre-tax savings of approximately $345 million to $365 million over the first two years of operation. The merger and integration costs and restructuring costs associated with the acquisition in 2007 are expected to be $625 million to $675 million on a pretax basis.
"Working closely with our new colleagues these past few months, I have seen first hand the similarity of both organizations' cultures," said Mike Rogers, executive vice president of State Street and former president and chief operating officer of Investors Financial Services Corp. "We are excited to begin the next phase of this consolidation and look forward to being a part of this even stronger organization."