Market Overview

State Street to Acquire Charles River Development for $2.6 Billion


Charles River Development is a Premier Provider of Investment
Management Front Office Tools and Solutions

Acquisition Complements State Street's Existing Back, Middle and
Front Office Capabilities to Enable First-Ever Global Front-to-Back
Client Servicing Platform

Acquisition Expected to be Accretive in 2020 and Offers Long-Term
Revenue Growth and Cost Reduction Opportunities

State Street Corporation (NYSE:STT) today announced that it has entered
into a definitive agreement to acquire Charles River Systems, Inc.
(Charles River Development), a premier provider of investment management
front office tools and solutions. Under the terms of the agreement,
State Street will purchase Charles River Development in an all cash
transaction for $2.6 billion. The acquisition, which is subject to
regulatory approvals and customary closing conditions, is expected to be
completed in the fourth quarter of 2018.

When integrated with State Street's existing front, middle and back
office capabilities, Charles River Development's front-office systems
will enable State Street to deliver a global front-to-back platform for
asset managers and asset owners that will be unique in the investment
servicing industry. This interoperable platform, supported by deep
enterprise data management capabilities, will enable investment
workflows, provide advanced data aggregation, analytics and compliance
tools, and connect and exchange data with other industry platforms and

"Today's announcement represents an important milestone in our digital
and technology transformation aimed at providing clients with
differentiated solutions and data. This acquisition will also enable us
to address a large adjacent $8 billion revenue pool for front office
services," said Jay Hooley, chairman and CEO of State Street. "Clients
today want solutions that can add value and achieve efficiencies from
portfolio modeling and construction all the way through to custody as
they face increasing complexity and regulatory expectations, and the
need to manage costs and achieve product or geographic expansion."

Charles River Development is a privately held company headquartered in
Burlington, Massachusetts with offices in North America, Europe and the
Asia-Pacific region. With total revenues of more than $300 million in
2017, its primary focus is providing solutions that automate front and
middle office investment management functions across asset classes on a
single platform. Today, Charles River Development serves more than 300
clients across institutional, wealth, asset owner and alternative market
segments, including 49 of the top 100 asset managers that in aggregate
have more than $25 trillion in assets under management.3

"State Street is an ideal partner for us as we share a common focus on
helping clients achieve better investment outcomes," said Charles River
Development CEO Peter Lambertus. "We are excited about the opportunities
ahead and what the combination of our two firms can do for the industry

"This acquisition represents not only a significant investment in our
future but also the recognition that the ability to assist clients in
managing their data needs and extract insights from their data is
increasingly the most important differentiator for our industry," said
Ron O'Hanley, president and chief operating officer of State Street.
"Our interoperable platform will enable clients to integrate and align
their preferred systems utilizing State Street provided data, and access
liquidity, insights, data and technology infrastructure. We are
confident that this acquisition will enable us to deepen and grow our
client base and deliver positive results for our shareholders."

The $2.6 billion purchase price is expected to be financed through the
suspension of approximately $950 million of share repurchases in the
second quarter of 2018 and during the remainder of 2018, and, subject to
market conditions, the remainder of the purchase price through the
issuance of equity, with approximately two-thirds of such equity
expected to be in the form of common stock and one-third in preferred

State Street yesterday announced an increase to its quarterly common
stock dividend for the third quarter of 2018 to $0.47 per share, an
increase of 12 percent over the second quarter of 2018. The acquisition
is expected to be accretive to earnings in 2020, excluding acquisition
and restructuring costs and based on anticipated revenue growth and cost
synergies. The Charles River Development acquisition was included in
CCAR as a potential strategic change and the Fed granted a conditional
non objection.

State Street's second quarter financial results will be released on
Friday, July 20, 2018 and reviewed, along with the proposed acquisition,
via webcast and teleconference at 8:00 a.m. EDT.

The conference call will be accessible on State Street's Investor
Relations website at
and by telephone at +1 (877) 423-4013 (Conference ID# 5069567) inside
the U.S. and +1 (706) 679-5594 (Conference ID# 5069567) outside the U.S.
The press release announcing the second-quarter financial results,
presentation materials referred to on the conference call, including
both with respect to State Street's financial results and the proposed
acquisition of Charles River Development announced in this news release,
and additional financial information will be available on State Street's
Investor Relations website prior to the conference call.

A replay of the conference call will be available for approximately two
weeks following the conference call on State Street's Investor Relations
and by telephone at +1 (855) 859-2056 (Conference ID# 5069567) inside
the U.S. or +1 (404) 537-3406 (Conference ID# 5069567) outside the U.S.

Forward Looking Disclaimer

This news release contains forward-looking statements as defined by
United States securities laws, including statements relating to State
Street's planned acquisition of Charles River Development and related
business, financial, capital and operational effects and considerations.
Forward-looking statements are often, but not always, identified by such
forward-looking terminology as "will," "opportunity," "expect,"
"estimate," "project," "anticipate," "plan," "strategy," "propose,"
"priority," "intend," "may," "objective," "forecast," "outlook,"
"believe," "seek," "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 time subsequent to the time this news release is first

Factors that could cause changes in the expectations or assumptions on
which forward-looking statements are based cannot be foreseen with
certainty and include, but are not limited to:

  • the possibility that some or all of the anticipated financial,
    operational, product innovation or other benefits or synergies of the
    acquisition will not be realized when expected or at all, including as
    a result of the impact of, additional costs or unanticipated negative
    synergies associated with, or problems arising from, the integration
    of Charles River Development, as a result of regulatory or operational
    challenges we may experience, as a result of disruptions from the
    transaction harming relationships with our clients, employees or
    regulators, or as a result of the strength of the economy and
    competitive factors in the areas where we and Charles River
    Development do business;
  • the failure to obtain necessary regulatory approvals (and the risk
    that such approvals may result in the imposition of conditions that
    could adversely affect us or the expected benefits of the
    transaction), to satisfy any of the other conditions to the
    acquisition on a timely basis or at all or to arrange financing
    consistent with our expectations or at all;
  • the occurrence of any event, change or other circumstances that could
    give rise to the termination of the definitive purchase agreement in
    respect of the acquisition;
  • potential adverse reactions or changes to client, regulatory, business
    or employee relationships, including those resulting from the
    announcement or completion of the acquisition;
  • demand for our and Charles River Development's services and product
  • requirements to obtain the prior approval or non-objection of the
    Federal Reserve or other U.S. and non-U.S. regulators for, or other
    market, business or other factors that could challenge our execution
    or implementation of or cause changes to, the use, allocation or
    distribution of our capital or other specific capital actions or
    corporate activities, including, without limitation, acquisitions,
    dividends, stock purchases and redemptions and investments in
  • the large institutional clients on which we focus are often able to
    exert considerable market influence and have diverse investment
    activities, and this, combined with strong competitive market forces,
    subjects us to significant pressure to reduce the fees we charge for
    our or may charge for Charles River Development's products or services
    and to potentially significant changes in our fee revenue;
  • our ability to recognize evolving needs of our and Charles River
    Development's clients and to develop products that are responsive to
    such trends and profitable to us; the performance of and demand for
    the products and services we and Charles River Development offer; and
    the potential for new products and services to impose additional costs
    on us and expose us to increased operational risk;
  • our ability to control operational risks, data security breach risks
    and outsourcing risks, 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 prove insufficient, fail or be circumvented;
  • our ability to expand our use of technology to enhance the efficiency,
    accuracy and reliability of our operations and our dependencies on
    information technology and our ability to control related risks,
    including cyber-crime and other threats to our information technology
    infrastructure and systems (including those of our third-party service
    providers) and their effective operation both independently and with
    external systems, and complexities and costs of protecting the
    security of such systems and data;
  • adverse changes in the regulatory ratios that we are, or will be,
    required to meet, whether arising under the Dodd-Frank Act or
    implementation of international standards applicable to financial
    institutions, such as those proposed by the Basel Committee, or due to
    changes in regulatory positions, practices or regulations in
    jurisdictions in which we engage in banking activities, including
    changes in internal or external data, formulae, models, assumptions or
    other advanced systems used in the calculation of our capital or
    liquidity ratios that cause changes in those ratios as they are
    measured from period to period;
  • changes in law or regulation, or the enforcement of law or regulation,
    that may adversely affect our or Charles River Development's business
    activities or those of our or Charles River Development's clients or
    counterparties, and the products or services that we or Charles River
    Development sell, including additional or increased taxes or
    assessments thereon, capital adequacy requirements, margin
    requirements and changes that expose us or Charles River Development
    to risks related to the adequacy of our or Charles River Development's
    controls or compliance programs;
  • adverse publicity, whether specific to State Street or Charles River
    Development or regarding other industry participants or industry-wide
    factors, or other reputational harm;
  • our ability to grow revenue, manage expenses, attract and retain
    highly skilled people and raise the capital necessary to achieve our
    business goals and comply with regulatory requirements and
    expectations; and
  • changes in accounting standards and practices.

Other important factors that could cause actual results to differ
materially from those indicated by any forward-looking statements are
set forth in State Street's 2017 Annual Report on Form 10-K and its
subsequent SEC filings. Investors are encouraged 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 should not be relied on as representing State Street's
expectations or beliefs as of any time subsequent to the time this news
release is first issued, and State Street does not undertake efforts to
revise those forward-looking statements to reflect events after that

About State Street Corporation

State Street Corporation (NYSE:STT) is the world's leading provider of
financial services to institutional investors including investment
servicing, investment management and investment research and trading.
With $33.9 trillion in assets under custody and administration and $2.7
trillion* in assets under management as of June 30, 2018, State Street
operates globally in more than 100 geographic markets and employs over
38,000 worldwide. For more information, visit State Street's website at

* Assets under management include the assets of the SPDR® Gold ETF and
the SPDR® Long Dollar Gold Trust ETF (approximately $33 billion as of
June 30, 2018), for which State Street Global Advisors Funds
Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State
Street Global Advisors are affiliated.

1 Offered by a single provider
2 Excluding
acquisition and restructuring costs
3 PwC Strategy &
Analysis, WillisTowersWatson; Prequin Hedge Fund Online; Swifi; PIO
Online; Cerulli Associates; Scorpio Partnership; PwC Market Research

View Comments and Join the Discussion!