State Street Corp will buy investment bank Brown Brothers Harriman & Co's (BBH) investor services business for $3.5 billion in cash, the companies said in a statement on Tuesday.
The deal will include BBH's custody, accounting, fund administration, global markets and technology services operations, State Street said.
Founded in 1818 and headquartered in New York City, BBH counts institutions, privately held companies, families and wealthy individuals as its clients.
BBH will operate its separate private banking and investment management businesses after the sale of its investor services unit, the banks said.
The division had $5.4 trillion in assets under custody at the end of June and will add to State Street's $31.9 trillion portfolio.
The deal, which is expected to close by the end of the year, will also give Boston-based State Street access to BBH's expertise in cross-border, alternatives, exchange-traded funds, and other high-growth asset classes.
The move by custodian bank State Street follows media reports that it was exploring options for its asset management business, including a merger with a competitor, as it seeks to gain scale.
Goldman Sachs & Co. LLC served as financial adviser to State Street, while Lazard served advised BBH.
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