State Street Corporation · NYSE:STT
State Street — Merger or Acquisition (July 2018)
14 slides from State Street's merger presentation, Jul 20, 2018
Slide 1: State Street's Acquisition of Charles River Development
State Street’s Acquisition of Charles River Development July 20, 2018 (Revised, July 23, 2018)
Slide 2: Forward-looking statements
Forward-looking statements • Asset management solutions market is evolving to an integrated front, middle, and back office • Facilitates compatibilities with clients’ existing solutions; works across third party platforms This presentation contains forward-looking statements as defined by United Sta
Slide 3: State Street to acquire Charles River Development (CRD)
State Street to acquire Charles River Development (CRD) Leading the industry evolution of investment servicing Premier provider of One of the world’s leading investment investment First-ever management front service providers office solutions across front-middle-back responsible for more office plat
Slide 4: CRD Overview
CRD Overview Long-standing global enterprise Attractive growth profile7 Adjusted Operating • CRD’s primary focus is providing solutions that Revenue ($M) Income ($M) automate front office workflows and middle office investment management functions across asset 7% CAGR 8% CAGR classes on a single pla
Slide 5: Combining two leading firms creates a unique front-to-back office platform to serve our clients
Combining two leading firms creates a unique front-to-back office platform to serve our clients Integrated Front-to- Key Activities Back Platform • Portfolio Modeling & Construction • Investment Risk & Compliance Front Office • Data Management >$25T AUM10 • Trade Management & Execution • FX Trading
Slide 6: CRD acquisition is a compelling strategic and financial opportunity
CRD acquisition is a compelling strategic and financial opportunity • Purchase price of $2.6B • Valuation of 13.9x CRD estimated 2018 net income including only 2021 cost synergies; Purchase Valuation of 18.2x CRD estimated 2018 net income price & • Financing via issuance of common equity, preferred
Slide 7: State Street and CRD serve top buy-side core clients
State Street and CRD serve top buy-side core clients A strong footprint in the Significant opportunities to expand share of A top 220 global institutions wallet and to grow the client base CRD State Street Strategic Approach to Capture Opportunities Asset 49 of the 86 of the • Grow CRD’s client base
Slide 8: Expected to generate meaningful revenue and cost synergies from enhanced platform services and efficiencies
Expected to generate meaningful revenue and cost synergies from enhanced platform services and efficiencies 4 5 Annual revenue synergies in 2021 Annual cost synergies in 2021 Estimated Estimated Range Revenue Range Cost in 2021 Synergy Highlights in 2021 Synergy Highlights Upgrade CRD clients from c
Slide 9: Summary
Summary 2 Industry’s first-ever global front-middle-back office solution • Represents a significant milestone in State Street’s technology transformation • Combination of State Street and CRD will provide a comprehensive, open architecture data-enabled platform – Enterprise end-to-end offering – fro
Slide 10: Appendix
Appendix Demonstrating the value of the integrated 11 platform for our core clients Addressing new market opportunities 12 Perspectives on transaction value 13 Slide endnotes 14 10
Slide 11: Demonstrating the value of the integrated platform for our core clients
Demonstrating the value of the integrated platform for our core clients A Potential investment manager systems’ consolidation Illustrative example: $500B+ Asset ManagerB Platform for growth and efficiencies Current State Future State • Integrated State Street data-driven platform 8-15 2-3 - Optimize
Slide 12: With CRD, State Street will be positioned to consolidate the fragmented market for front and middle office solutions
With CRD, State Street will be positioned to consolidate the fragmented market for front and middle office solutions Allows State Street to address a new revenue opportunity at scale Market SizeA Growth Rate19 Market Structure Strong Strategic Rationale Offers solutions in the front, • Highly frag
Slide 13: Perspectives on Transaction Value
Perspectives on Transaction Value Purchase price attractive relative to comparables A A 2018E Price / Earnings 2018E EV / EBITDA 23.2x 18.2x 18.1x 12.6x Includes 2021 13.9x cost synergies Includes 2021 9.7x cost synergies Includes 2021 10.5x revenue & cost B synergies Includes 2021 7.4x revenue & co
Slide 14: Slide endnotes
Slide endnotes 1. Source: State Street and McKinsey Global Institute, Global Capital Markets, December 31, 2016 and updated on January 2018 per bespoke McKinsey report. 2. Offered by a single provider. 3. EPS accretion excludes acquisition and restructuring costs. 4. Revenue synergies mainly represe