State Street to buy Intesa business for $1.87B

[December 22, 2009]  BOSTON (AP) -- State Street Corp. said Tuesday that it will buy the securities services business of Italian banking group Intesa Sanpaolo for about $1.87 billion in cash.

The financial services provider said the acquisition will broaden its presence overseas, as the Intesa unit has offices in Italy and Luxembourg. State Street anticipates funding the transaction with available capital.

The deal includes the global custody, depository banking, correspondent banking and fund administration components of the securities services operations. About 555 employees will join State Street on closing.

The transaction may also include about $16 billion in cash deposits if levels stay consistent with those as of June 30.

Additionally, State Street expects to support the acquired Intesa balance sheet with approximately $800 million of additional capital at the closing

As part of the acquisition, State Street will enter into a long-term investment servicing arrangement with Intesa to service all of its investment management affiliates, including Italy's biggest fund manager, Eurizon Capital.

State Street anticipates about $120 million in acquisition-related costs over a five-year period, with most costs taking place in the first three years.

The Boston company expects to save about $90 million over five years and sees the deal modestly adding to its fiscal 2010 earnings.

The acquisition is targeted to close in the second quarter.

[Associated Press]

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