Boston-based State Street said the deal, which offers a 38% premium to Friday's closing price of its Boston-based neighbor, will enhance its position as a worldwide service provider of fund accounting to the mutual fund industry and its clear leadership in servicing for hedge and offshore funds.
State Street will issue 0.906 share for each Investors Financial share. The deal values Investors Financial at $65 a share, up from Friday's close of $46.95.
The transaction is expected to be dilutive to State Street's operating earnings in 2007, neutral to earnings in 2008 on an operating basis, accretive to earnings in 2008 on a cash basis and accretive to operating earnings in 2009, based on anticipated pre-tax cost savings of approximately $345-$365 million during the first two years following closing. The anticipated savings will result primarily from technology, staffing and real estate consolidations. State Street also expects pre-tax restructuring charges of $625-$675 million. The transaction, which is subject to customary conditions, including regulatory and Investors Financial Services Corporation's stockholders approval, is expected to close by the third quarter of 2007.