DST To Buy Remaining Interest In JVs, BFDS And IFDS U.K., From State Street

(RTTNews) - DST Systems Inc. (DST) said that it agreed to acquire State Street Corp.'s (STT) ownership interest in the Boston Financial Data Services, Inc. or "BFDS" joint venture and the International Financial Data Services Limited or "IFDS U.K." joint venture in the UK.

BFDS provides innovative shareholder recordkeeping, intermediary and investor services, and regulatory compliance solutions to financial services clients in the United States.

IFDS U.K. is an investor and policy holder administrative services and technology provider to the collective funds, insurance, and retirement industries.

Following completion of these acquisitions, DST will own 100% of the equity interests in both BFDS and IFDS U.K. DST and State Street will continue to service offshore and cross-border markets in Canada, Ireland and Luxembourg through the 50/50 joint venture International Financial Data Services, L.P. or "IFDS L.P.". The IFDS U.K. acquisition has closed and the BFDS acquisition is expected to close within the next several days.

In the US, DST's wholly-owned subsidiary will acquire State Street's ownership interest in BFDS by delivery to State Street of approximately 2.0 million shares of State Street common stock owned by DST for total consideration of $157.6 million in a non-taxable exchange under Section 355 of the Internal Revenue Code.

BFDS is expected to contribute approximately $220 million of incremental operating revenue and $20 million of operating income to DST over the next twelve months before synergies, restructuring costs and amortization of the intangibles resulting from the acquisition.

DST expects to achieve approximately $20 million of cost savings from the realization of synergies within the first 18 months and expects the transaction to be accretive to diluted earnings per share by $0.15 to $0.19 in the next twelve months before synergies, restructuring costs and amortization of intangibles.

In the U.K., DST's wholly-owned subsidiary will acquire the ownership interest in IFDS U.K. for total cash consideration of $175 million. The acquisition will be funded through cash on hand and DST's existing debt facilities.

DST expects the consolidated IFDS U.K. businesses to contribute approximately $440 million of incremental annual operating revenues upon acquisition and $20 million of operating income before synergies, restructuring costs and amortization of intangibles over the next twelve months.

DST expects the IFDS U.K. transaction to be accretive to diluted earnings per share by $0.18 to $0.22 in the next twelve months before synergies, restructuring costs and amortization of intangibles.