8-KRegulation FD

STATE STREET CORP 8-K Report, Regulation FD Disclosure (Mar 27, 2017)

Filed March 27, 2017For Securities:STTSTT-PG

Summary

State Street Corporation (STT) announced on March 27, 2017, a strategic divestiture of its interests in two joint ventures, Boston Financial Data Services, Inc. (BFDS) and International Financial Data Services Limited (IFDS Ltd), to DST Systems, Inc. This transaction is designed to streamline State Street's operations and is structured to generate a one-time after-tax gain. While the sale of IFDS Ltd has been completed, the BFDS transaction is expected to close shortly. The divestiture involves State Street exchanging its stake in BFDS for approximately 2.0 million shares of its own common stock, valued at $158 million. This stock acquisition will be integrated into the company's existing share repurchase program. The sale of IFDS Ltd yielded approximately $175 million in cash. Collectively, these transactions are anticipated to result in an aggregate after-tax gain of approximately $45 million. State Street anticipates no material impact on revenue from these dispositions in the remaining quarters of 2017, as these joint ventures were accounted for under the equity method.

Key Highlights

  • 1State Street is selling its interests in joint ventures BFDS and IFDS Ltd to DST Systems, Inc.
  • 2The transaction is expected to yield a one-time after-tax gain of approximately $45 million.
  • 3State Street will acquire approximately $158 million worth of its own common stock in exchange for its BFDS interest.
  • 4The sale of IFDS Ltd will result in approximately $175 million in cash proceeds.
  • 5The BFDS transaction is subject to customary closing conditions and is expected to finalize within days.
  • 6The divestitures are not expected to have a material impact on State Street's revenue for the remainder of 2017.
  • 7This move is part of a strategic streamlining of State Street's business operations.

Frequently Asked Questions

State Street anticipates a one-time after-tax gain of approximately $45 million from the disposition of its interests in BFDS and IFDS Ltd. The company is also acquiring approximately $158 million of its own common stock as part of the BFDS transaction.

State Street does not expect a material impact on revenue in the remaining quarters of 2017 from these dispositions. The joint ventures were previously accounted for using the equity method, meaning their earnings were recognized quarterly, and their divestiture is not projected to significantly alter overall revenue streams.

Yes, State Street and DST will continue to service offshore and cross-border markets in Canada, Ireland, and Luxembourg through their existing 50/50 joint venture, International Financial Data Services, L.P.

The filing includes a comprehensive list of forward-looking statements and associated risks, common in SEC filings. Key risks highlighted include market volatility, regulatory changes, interest rate fluctuations, credit quality of investments, and the ability to successfully execute strategic initiatives like the State Street Beacon transformation program. Specific to this transaction, risks could include failure to satisfy closing conditions for the BFDS deal or integration challenges if there were further collaborations, though this filing primarily details a divestiture.