State Street has entered into a definitive agreement to buy investor services business of Brown Brothers Harriman & Co. (BBH) in a cash deal valued at $3.5bn.

Following the transaction, BBH will continue to independently own and operate its separate private banking and investment management businesses.

BBH’s investor services business encompasses custody, accounting, fund administration, global markets and technology services.

The unit specialises in cross-border, alternatives, and ETFs among other high-growth asset classes.

It had $5.4 trillion in assets under custody (AUC) as of 30 June 2021.

State Street expects the deal to strengthen its competitive positioning as an enterprise outsource solutions provider and expand its geographic coverage.

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By GlobalData

State Street chairman and CEO Ron O’Hanley said that the combination with BBH Investor Services helps the firm consolidate its position as the industry innovator and leader.

“We are enhancing our leadership position across a range of services, augmenting our position in a number of key markets, growing relationships with many of the leading global asset managers and owners, and increasing our capabilities and scale,” O’Hanley said.

The deal is expected to be concluded by year-end 2021.

BBH managing partner Bill Tyree said: “We made this decision after careful consideration of the current and future landscape of the global securities servicing industry, including how best to support and innovate for the growing breadth and complexity of our clients’ servicing requirements.”

Upon the closing of the deal, BBH Investor Services employees will join State Street.

BBH global head of investor services and partner Seán Páircéi will become part of State Street’s management committee.

The rest of BBH investor services’ senior management team will transition to executive leadership roles at State Street.

This July, State Street entered into an agreement to acquire Mercatus, a data management provider for private market managers.