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Monday, October 25, 2010

SSgA Buys a $36.2 Billion Biz Across the Atlantic

News summary by MFWire's editors

State Street Global Advisors [see profile] just added $36.2 billion in assets and more than 120 employees thanks to a $79.3 million deal, according to Bloomberg. On Friday the Boston-based mutual fund firm revealed plans to buy Bank of Ireland Asset Management by the end of the first quarter of 2011.

Banking Business Review, the Boston Business Journal, the Boston Globe, the Irish Times, Pensions & Investments, Proactive Investors and Reuters all reported on the deal.

SSgA isn't new to Emerald Isle: the asset manager already boasts more than 2,000 employees in the country, which the Irish times estimates account for about 20 percent of the staff of Ireland's entire fund business.

Company Press Release

BOSTON, MA and DUBLIN -- 10/22/2010

State Street Global Advisors (SSgA), the investment management business of State Street Corporation (NYSE: STT), announced today that it has agreed to acquire Bank of Ireland Asset Management (BIAM) for consideration of approximately €57 million inclusive of estimated net assets of the business of €14 million. Pending regulatory approvals and other closing conditions, the transaction is expected to close in the first quarter of 2011 or earlier. State Street expects the transaction to be slightly accretive to 2011 earnings, excluding one-time costs. Upon closing of the transaction, the BIAM operation in Dublin will transition to State Street Global Advisors Ireland Limited.

With approximately €26 billion in assets under management among more than 500 clients as of September 30, 2010, BIAM is a recognized leader in the Irish market offering a broad range of investment solutions to institutional investors and intermediaries including global fundamental equities, fixed income, cash, asset allocation, property and balanced funds. Upon closing of the transaction, more than 120 employees of BIAM are expected to join SSgA in Dublin. “This acquisition enables SSgA to expand its range of investment capabilities to include active fundamental management,” said Scott Powers, president and chief executive officer of State Street Global Advisors. “As our clients look for more solutions-driven investment management strategies that span the risk spectrum, the addition of this team and capabilities will enhance our ability to deliver on these needs. Like SSgA, Bank of Ireland Asset Management’s investment philosophy is rooted in a disciplined, team-based approach and has a strong track record of excellent performance. We look forward to building on this track record and extending its capabilities to our global client base.”

With this acquisition, SSgA will add Dublin as its 10th global investment center from which investment teams manage client assets. SSgA offers a broad range of investment solutions covering every major asset class, capitalization range, region and style.

Chris Johns, currently the interim chief executive officer and chief investment officer of BIAM will be named SSgA chief investment officer for fundamental active equity and will report to Rick Lacaille, SSgA’s global chief investment officer.

State Street has had a presence in Ireland since 1996 and has grown to be one of the country’s largest fund administrators and custodians. State Street currently has approximately 2,000 employees in Ireland and has offices in Dublin, Drogheda, Kilkenny and Naas. Earlier this year, State Street announced the opening of its new 165,000 square foot Irish headquarters at Sir John Rogerson’s Quay in Dublin.

About State Street Global Advisors

State Street Global Advisors (SSgA) is a global leader in asset management that sophisticated investors worldwide rely on for a disciplined investment process, powerful global investment platform and access to every major asset class, capitalization range and style. SSgA is the asset management business of State Street, one of the world’s leading providers of financial services to institutional investors.

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 $20.2 trillion in assets under custody and administration and $1.9 trillion in assets under management at September 30, 2010, State Street operates in 25 countries and more than 100 geographic markets worldwide.

Forward-Looking Statements

This news release contains forward-looking statements as defined by United States securities laws, including statements agreement to acquire BIAM, the results and impact of that acquisition and related rationales, as well as about our goals and expectations regarding our business, financial condition, results of operations and strategies, the financial and market outlook, governmental and regulatory initiatives and developments, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “plan,” “expect,” “look,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target” 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 date subsequent to the date of this news release. Important factors that may affect future results and outcomes include, but are not limited to:

  • the ability to obtain regulatory approvals for the transaction and the satisfaction of other closing conditions;
  • the risks that businesses will not be integrated successfully, or will take longer than anticipated, that expected synergies will not be achieved or unexpected dissynergies will be experienced, that customer retention goals will not be met and that disruptions from the transaction will harm relationships with customers, employees and regulators;
  • changes in law or regulation that may adversely affect our clients’ or our counterparties’ business activities and the products or services that we sell, including additional or increased taxes or assessments, capital adequacy requirements and changes that expose us to risks related to compliance;
  • financial market disruptions and the economic recession, whether in the U.S. or internationally, and monetary and other governmental actions, including regulation, taxes and fees, designed to address or otherwise be responsive to such disruptions and recession, including actions taken in the U.S. and internationally to address the financial and economic disruptions that began in 2007;
  • increases in the volatility of, or declines in the levels of, our net interest revenue, changes in the composition of the assets on our consolidated balance sheet and the possibility that we may be required to change the manner in which we fund those assets;
  • the financial strength and continuing viability of the counterparties with which we or our clients do business and to which we have investment, credit or financial exposure;
  • the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities, and the liquidity requirements of our clients;
  • the credit quality, credit agency ratings, and fair values of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of the respective securities and the recognition of an impairment loss in our consolidated statement of income;
  • the maintenance of credit agency ratings for our debt and depository obligations as well as the level of credibility of credit agency ratings;
  • the performance and demand for the products and services we offer, including the level and timing of redemptions and withdrawals from our collateral pools and other collective investment products;
  • the risks that acquired businesses will not be integrated successfully, or that the integration will take longer than anticipated, that expected synergies will not be achieved or unexpected disynergies will be experienced, that client and deposit retention goals will not be met, that other regulatory or operational challenges will be experienced or that disruptions from the transaction will harm relationships with clients, employees or regulators;
  • the possibility of our clients incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets;
  • our ability to attract deposits and other low-cost, short-term funding;
  • potential changes to the competitive environment, including changes due to the effects of consolidation and perceptions of State Street as a suitable service provider or counterparty;
  • the level and volatility of interest rates and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally;
  • our ability to measure the fair value of the investment securities on our consolidated balance sheet;
  • the results of litigation, government investigations and similar disputes or proceedings;
  • adverse publicity or other reputational harm;
  • our ability to grow revenue, attract, retain and compensate highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements;
  • our ability to control operating risks, information technology systems risks and outsourcing risks, and our ability to protect our intellectual property rights, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will fail or be circumvented;
  • the potential for new products and services to impose additional costs on us and expose us to increased operational risk;
  • changes in accounting standards and practices; and
  • changes in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that impact the amount of taxes due.

    Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2009 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 speak only as of the date hereof, October 22, 2010, and we do not undertake efforts to revise those forward-looking statements to reflect events after this date. 

    Edited by: Neil Anderson, Managing Editor

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