State Street, UBS Are in Talks to Merge Asset-Management Businesses -- Update
December 11 2020 - 8:59PM
Dow Jones News
By Justin Baer
State Street Corp. and UBS Group AG are in talks to merge their
asset-management businesses, according to people familiar with the
matter.
The firms have held discussions since early 2020, and by this
summer appeared close to an agreement, the people said. It is
unclear why a deal didn't materialize at that time, but the two
sides remained in touch.
State Street had hired Goldman Sachs Group Inc. to review the
options for its investing business, called State Street Global
Advisors, the people said.
As the firm weighed those options, State Street executives
concluded the business needed to get bigger to remain
competitive.
Buying a rival, however, wouldn't be easy. Capital rules
regarding large U.S. banks limit how much State Street could spend,
as would its own stockholders' initial reaction to its 2018
acquisition of Charles River Systems Inc. The bank's shares had
tumbled on the news of that deal. Pursuing a joint venture with
another firm emerged as the preferred path forward, the executives
believed, and State Street reached out to several potential
partners, including UBS.
State Street's plan drew interest from UBS, reviving discussions
the two banks held nearly a decade earlier. The banks weighed a
similar tie-up in 2012, when many financial firms looked to deals
to help accelerate their recoveries from the 2008-09 financial
crisis.
For a time, an agreement this year seemed likely. State Street
and UBS had settled on roles for some of the venture's top
executives and were considering names for the new stand-alone
manager, the people said.
State Street's decision to weigh options for its
asset-management business, including a merger with UBS or another
rival, was reported earlier by Bloomberg News. State Street's
shares rose 1.5% to $72.80 on Friday after the report.
State Street Global Advisors manages more than $3 trillion and
remains a leading seller of exchange-traded funds, the low-cost
investing structure the firm had pioneered. But the same forces
that State Street's ETFs helped unleash -- the digitization of a
hidebound industry accustomed to thick profit margins -- have now
dropped the cost of many investing services to zero or close to it
and forced money managers and brokers to cut expenses severely.
Those challenges have led many financial firms, from Franklin
Resources Inc. and Invesco Ltd. to Morgan Stanley, Charles Schwab
Corp. and JPMorgan Chase & Co., to beef up their asset and
wealth management businesses through acquisitions.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
December 11, 2020 20:44 ET (01:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
State Street (NYSE:STT)
Historical Stock Chart
From Aug 2024 to Sep 2024
State Street (NYSE:STT)
Historical Stock Chart
From Sep 2023 to Sep 2024