State Street Buys IFS for $4.5 B

Elena
05 Feb, 2007
New York City

In terms of the deal, Investors Financial shareholders will receive 0.906 shares of State Street common stock for each share held, based upon the closing price of State Street common stock on February 2. The average number of State Street common shares issued in the transaction will be 62 million. On completion of the deal, State Street will possess more than $14 trillion in assets under custody.

[R]7:45AM State Street agreed to buy Investors Financial Services for $4.5 B.[/R]
State Street Corp. ((STT)) announced an agreement to buy Investors Financial Services Corp. ((IFIN)) in a deal worth about $4.5 billion in stock. In terms of the deal, Investors Financial shareholders will receive 0.906 shares of State Street common stock for each share held, based upon the closing price of State Street common stock on February 2. The average number of State Street common shares issued in the transaction will be 62 million. The transaction is expected to be dilutive to State Street''s operating earnings in 2007, neutral to earnings in 2008 on an operating basis. Ii is also anticipated that the deal will boost earnings in 2008 on a cash basis and lift operating earnings in 2009, based on anticipated pre-tax cost savings of approximately $345 million to $365 million in the first two years following closing. State Street expects to take restructuring charges of between $625 million to $675 million. On completion of the deal, State Street will possess more than $14 trillion in assets under custody.


[R]7:30AM Asian market finished mixed on Monday with Japan down on Nissan.[/R]
Asian markets finished mixed on Monday. The benchmark index Nikkei 225 Index in Japan finished 1.2% lower at 17,344.80. Nissan Motor slumped 8.4% after it reported a 23% decrease in Q3 net profit and reduced its full-year guidance. Toyota and Honda also declined 1.6% and 3.6% respectively. Inpex Holdings, the leading Japanese oil producer also shed 0.4%, but Nippon Oil, the largest refiner in Japan advanced 1.7%. Consumer-electronics company JVC gained on rumors that its parent firm Matsushita Electric Industrial is considering selling its stake in the JVC to a private-equity group.

In South Korea, the Kospi index edged up 0.3% to 1,417.95. Hyundai Motor declined 0.8% as its chairman was sentenced to three years in prison on fraud. In HK, the benchmark index Hang Seng Index finished 0.5% lower at 20,455.62 as traders took profits in China Mobile and HSBC. HSBC finished 0.6% lower, while China Mobile shed 0.3%. Apparel retailer, Esprit Holding bucked the trend and gained 3% after Citigroup and UBS lifted their target prices on the share. China Shanghai Composite continued its losing streak and dipped 2.3%, Australian S&P/ASX 200 shed 0.2%, while New Zealand NZSX-50 gained 0.1% and Taiwan Weighted Price Index ended 0.1% higher.


[R]6:30AM European markets traded flat on Monday on weakness in banks, autos.[/R]
European markets were flat on Monday. By mid morning, FTSE 100 in London was marginally 0.1% higher at 6,314.3, Frankfurt Xetra Dax dipped 0.2% to 6,874.6 and the CAC 40 in Paris was flat at 5,674.98.

Advancers

Irish airline company Ryanair surged 6.1% on an upbeat figures of Q3 results. The company posted a surprising 30% increase in Q3 net profit, contrary to analysts’ expectations. Oil companies gained as the price of crude oil was firm around $59 in early trading. French Total advanced 0.7%, while BP added more than 1.3%. Property groups were also stronger with Unibail of France leading the sector higher, rising 4.8% on an update to overweight from neutral by JP Morgan.

Decliners

The leading decliners were Credit Suisse, falling 1% and pulling the sector lower as ING lowered its recommendation on the stock and reduced its rating from buy to hold, which led to profit-profit. Faurecia, the largest maker of auto interior in Europe plunged 5.6% after it said its loss widened after writing down assets for a second year in a row. Faurecia led other major companies lower like Renault, down 1% and DaimlerChrysler AG, off 0.4%. Of the stocks in focus, Endesa lost 2.8% after German utility Eon submitted its renewed bid for acquiring the Spanish company, which was lower than Endesa closing price on Friday.

Oil and gold

Oil prices declined on Monday below $59 and were down 15 cents for light, sweet crude for March delivery at $58.87 a barrel on the New York Mercantile Exchange. Brent crude for March delivery on the ICE Futures exchange dipped 31 cents to $58.10 a barrel. A report of losses at metals-trading hedge fund Red Kite Management Ltd sent gold futures lower on Monday. Gold for immediate delivery fell $1.37 an ounce, or 0.2%, to $646.48.

Currencies

A decision on European interest rates later this week weighed on the euro and the 13-nation currency lost to the US dollar. The euro fetched $1.2940 in morning European trading, down from $1.2967 in New York late Friday. The British pound also declined to $1.9591 from $1.9673, while the dollar retreated to 120.74 Japanese yen from 121.07 yen.