State Street Agrees To Acquire GE Asset Management For $485M

State Street agrees to acquire GE Asset Management for $485M State Street (STT) announced that it has agreed to acquire GE Asset Management, an asset manager from GE (GE). The transaction is expected to increase SSGA’s assets under management by approximately $100B upon closing and add new alternatives capabilities, while strengthening existing fundamental equity and active fixed income teams. Under the agreement, State Street will acquire GEAM in a cash transaction with a total purchase price of up to $485M, subject to adjustments.

Pending regulatory approvals and other customary closing conditions, the transaction is expected to be finalized early in the third quarter of 2016. State Street expects the transaction to be accretive to operating-basis earnings per share for the first full 12-month period following closing. Excluding restructuring charges, the transaction is expected to be accretive to operating-basis EPS for the first full twelve-month period following the close of the transaction.

The targeted client asset retention rate is greater than 90 percent. IRR expected to exceed its target 11% hurdle rate, assuming achievement of planned synergies. In the first full twelve-month period following the close of the transaction, fee revenue from the transaction is expected to be approximately $270M to $300M. Total projected merger and integration costs is expected to be $70M-$80M through 2018.

It is estimated that the transaction would result in a reduction of 40-50 bps to State Street Corporation’s fully phased-in risk-based capital ratios under both standardized and advanced approaches and of approximately 15-20 bps to its fully phased-in tier 1 leverage and supplementary leverage ratios. State Street anticipates issuing preferred shares prior to the close of the transaction to offset the impact on our leverage ratios and, with that issuance, do not expect the closing of the transaction to have any material impact on our common stock repurchase program.