State Street (NYSE:STT) stock was down on Friday after announcing it will acquire Charles River.
The deal will have State Street spending a total of $2.6 billion to acquire the provider of investment management front office tools and solutions. STT also notes that the deal will be fully funded with cash.
According to State Street, it will be getting the cash for the deal from its share repurchase program. As such, it is suspending $950 million of share repurchases in the second quarter of the year and for the rest of 2018.
“This acquisition will also enable us to address a large adjacent $8 billion revenue pool for front office services,” Jay Hooley, Chairman and CEO of State Street, said in a statement. “Clients today want solutions that can add value and achieve efficiencies from portfolio modeling and construction all the way through to custody as they face increasing complexity and regulatory expectations, and the need to manage costs and achieve product or geographic expansion.”
News of the deal between State Street and Charles River comes on the same day as the former’s earnings report for the second quarter of the year. This report may also be dragging down STT stock today.
State Street’s earnings report for the second quarter of the year includes earnings per share of $2.05 on revenue of $3.03 billion. Earnings per share and revenue from the same period of the year prior were $1.67 and $3.02 billion. Wall Street was looking for earnings per share of $2.01 on revenue of $3.05 billion for the quarter.
STT stock was down 6% as of Friday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.