US custodian bank State Street Corporation has terminated its US$3.5 billion agreement to acquire Brown Brothers Harriman & Co’s investor service business, saying that the deal would be more complex and have limited benefit if it were reworked according to regulatory feedback.
State Street had proposed to acquire BBH’s investor service business, which includes custody, accounting, fund administration, global markets and technology services, in September 2021.
The deal had been scheduled to be completed within three months.
“After consideration of both regulatory feedback and potential transaction modifications to address that feedback, State Street has determined that the regulatory path forward would involve further delays, and all necessary approvals have not been resolved,” the bank says in a statement on November 30.
The proposed modified structure “was increasingly complex, presented additional operational risk to State Street and would limit the anticipated transaction benefits relative to original expectations”.
“It would also include delays in the timing and potential limits to the amount of deal synergies.”
Under the circumstances, State Street says it’s not in the best interests of clients, shareholders or employees to proceed with the deal in a “challenging” environment for financial services mergers and acquisitions.
The decision wasn’t made lightly and “is in no way a reflection of the quality of the BBH franchise” State Street Chairman and Chief Executive Officer Ron O'Hanley says in the statement.
Boston-based State Street had $35.7 trillion of assets under custody and/or administration as of September 2022.