approved the purchase of the financial services company Charles River Systems Inc. for $ 2.6 billion in cash to provide its asset management clients with more data and analysis tools ,
Charles River, a private company based in Burlington, Massachusetts, operates a software platform that is used by more than 300 clients. It had sales of more than $ 300 million last year.
State Street plans to partially pay for the deal by canceling plans to repurchase $ 950 million in company stock this year. The company said the transaction received a "conditional non-appeal" from the Federal Reserve when it submitted its annual plan to return capital to shareholders, although the transaction will still need the approval of the Fed.
State Street, the core administrative and accounting firm for 86 of the world's 1
The deal comes about as State Street and other custody banks try to pull out of years of low revenue growth. The industry's biggest players, including State Street, have cut costs. These cuts have helped to raise profits, but investors have opted for companies like State Street and
Bank of New York Mellon
to receive higher fees from its financial services customers.
State Street announced the Charles River agreement before reporting net income of $ 698 million, or $ 1.88 per share, in the second quarter. Earnings were up 20% from a year ago, when the company received $ 584 million or $ 1.53 per share.
Recent earnings included $ 77 million, or 17 cents a share, related to downsizing and downsizing, which included management changes associated with continued automation of functions and elimination of expenses
S & P Global Market Intelligence surveyed analysts expected earnings per share of $ 2.01.
Total revenue increased 7.7% to $ 3.03 billion. Fee income climbed 5.5% to $ 2.36 billion, in part due to higher asset prices. The average analyst estimate, according to S & P Global, was $ 3.05 billion.
State Street stock fell $ 2.95 or 3.2% to $ 92.74 during early trading.
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