State Street Corporation · NYSE:STT
State Street — Merger or Acquisition (September 2021)
19 slides from State Street's merger presentation, Sep 7, 2021
Slide 1: State Street's Acquisition of Brown Brothers Harriman Investor Services
State Street’s Acquisition of Brown Brothers Harriman Investor Services September 7, 2021 NYSE: STT
Slide 2: Preface and forward-looking statements
Preface and forward-looking statements This presentation (and the conference call accompanying it) contains forward-looking statements as defined by United States securities laws. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are d
Slide 3: State Street to acquire Brown Brothers Harriman Investor Services
State Street to acquire Brown Brothers Harriman Investor Services A compelling and unique opportunity to drive our core strategy Premier enterprise 1 Strengthens market leadership in asset servicing solutions provider serving 3 • Creates world’s #1 asset servicer by AUC institutional clients across
Slide 4: Brown Brothers Harriman Investor Services overview
Brown Brothers Harriman Investor Services overview A leading independent asset servicing provider operating in over 90 geographic markets A Global expertise and platform Key figures (FY2020 unless noted otherwise) BBH Investor Services at a glance Key enablers of success Total revenue 1 $1.4B • Lead
Slide 5: Transaction summary
Transaction summary Expected to generate attractive long-term financial returns and compelling financial impacts Consideration and • 100% cash consideration of $3.5B valuation • Valuation of ~12x BBH Investor Services’ 2021E earnings • Transaction only includes BBH Investor Services and not BBH’s Pr
Slide 6: Strategic rationale: Strengthens market leadership in asset servicing
1 Strategic rationale: Strengthens market leadership in asset servicing Global custodians by AUCA ($T) Delivers scale and enhances positioning Enhances position in key markets, expands relationships with STT + BBH IS $37.3 leading global asset managers and owners, and further cements Pro-forma State
Slide 7: Strategic rationale: Expands and deepens international reach for State Street
2 Strategic rationale: Expands and deepens international reach for State Street EMEA Japan Latin America • Deepens State Street’s leading position • Adds scale and expertise on Cayman • Nearly doubles State Street’s revenue in and scale in EMEA offshore markets offshore funds for Japanese investors,
Slide 8: Strategic rationale: Propels Alpha strategy by accelerating development, while mitigating costs
Strategic rationale: Propels Alpha strategy by accelerating development, while 3 mitigating costs Propels Alpha value + = proposition and capabilities • A leading front-to-back • Centralized communications • Accelerates the development of the investment management platform platform for investment Al
Slide 9: Strategic rationale: Cost synergies and balance sheet actions expected to drive earnings growth
Strategic rationale: Cost synergies and balance sheet actions expected to drive 4 earnings growth Expected cost synergies9 Balance sheet actions10 Estimated Estimated synergies by synergies by end of year 3 Highlights end of year 3 Highlights Elimination of redundant Redirect deposits onto State Ove
Slide 10: Strategic rationale: Expected to enhance State Street's financial profile
4 Strategic rationale: Expected to enhance State Street’s financial profile BBH Investor Services standalone financial performance1,2 FY2020 pro-forma financial profile FY2021E Total revenue Combined %∆ ($B, non-GAAP basis) 1 A Pro-forma FY2020 FY2020 FY2020 $1,490 +5% $1,420 NII 25 55 (27)% 75 Soft
Slide 11: Summary: Compelling transaction builds capabilities and scale while enhancing earnings potential
Summary: Compelling transaction builds capabilities and scale while enhancing earnings potential 3 • Strengthens market leadership in asset servicing, creating world’s #1 asset servicer by AUC Strategically • Expands and deepens international reach, particularly in EMEA, Japan, and Latin America att
Slide 12: Appendix
Medium-term financial targets 13 Proven track record of integration success 14 Reconciliation of non-GAAP financial information 15 Appendix Endnotes 16 Forward-looking statements 17 Non-GAAP measures 18 Definitions 19 12
Slide 13: Transaction enables State Street to increase medium-term pre-tax margin financial target
Transaction enables State Street to increase medium-term pre-tax margin financial target Our strategic priorities will deliver growth, drive innovation and enhance shareholder value Update to targetA Revenue growth 4–5% with CRD Consistent with target Pre-tax margin 30% ~1%pt margin uplift to 31% EP
Slide 14: Proven track record of integration success
Proven track record of integration success Proven ability to integrate significant acquisitions Global Securities Services Securities Services Administration Services 2002 2007 2009 2012 2018 Deal Value: $1.5B Deal Value: $4.5B Deal Value: $1.9B Deal Value: $0.6B Deal Value: $2.6B AUC/A: $2.2T AUC/A
Slide 15: Reconciliation of Non-GAAP financial information
Reconciliation of Non-GAAP financial information Dollars in millions, except where otherwise noted 1Q20 2Q20 3Q20 4Q20 FY 2020 Total fee revenue, GAAP-basis $2,399 $2,378 $2,306 $2,416 $9,499 Total fee revenue, excluding notable items 2,399 2,378 2,306 2,416 9,499 Total revenue, GAAP-basis 3,065 2,9
Slide 16: Endnotes
Endnotes 1. BBH Investor Services’ FY2020 income statement data represents the unaudited fully allocated internal management income statement attributable to the businesses and entities included within the transaction perimeter and is consistent with management reporting which BBH Investor Services
Slide 17: Forward-looking statements
Forward-looking statements This presentation (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about State Street’s planned acquisition of BBH’s Investor Services business and related business, fi
Slide 18: Non-GAAP Measures
Non-GAAP Measures In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-G
Slide 19: Definitions
Definitions SM Alpha State Street Alpha APAC Asia and Pacific AUC Assets under custody AUC/A Assets under custody and/or administration AUM Assets under management BBH Brown Brothers Harriman BBH IS Brown Brothers Harriman Investor Services Bps Basis points, with one basis point representing one hun
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