State Street has reached an agreement to purchase GE Asset Management (GEAM), a leading asset manager, from GE.
Under the agreement, State Street is to acquire GEAM in a cash transaction with a total purchase price of up to $485m, subject to adjustments.
The transaction, subject to regulatory approvals and other customary closing conditions, is expected to close early in the third quarter of 2016.
State Street said it expects the transaction to be accretive to operating-basis earnings per share for the first full 12–month period following closing.
The transaction is expected to increase State Street Global Advisors’ assets under management by approximately $100bn (€88.4bn) upon closing and add new alternatives capabilities, while strengthening existing fundamental equity and active fixed income teams.
GEAM has over $100bn (€88.4bn) in assets under management for more than 100 institutional clients, including corporate and public retirement plan sponsors, foundations, endowments, sovereign wealth funds and insurance companies.
Total projected merger and integration costs will amount to $70-$80m through 2018, State Street assesses.
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.
“This transaction reflects our view of GEAM as a very high quality organisation with strong cultural alignment with SSGA. It is also reflective of our desire to allocate capital to higher growth and return businesses,” said Jay Hooley, chairman and chief executive officer of State Street Corporation.
“As defined benefit plans – both private and public – undergo change, GEAM’s skills coupled with SSGA’s existing capabilities will position us well to provide effective solutions and outcomes to these investors,” said Ron O’Hanley, president and chief executive officer of SSGA.
“GEAM will bring new alternatives capabilities in direct private equity and real estate to SSGA while enhancing our existing active fundamental equity, active fixed income and hedge fund teams. In addition, GEAM’s OCIO and Insurance platforms significantly strengthen our capabilities in these fast growing areas,” he added.
State Street had $2.24trn (€1.98trn) in assets under management as of 31 December 2015.