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State Street to acquire GE Asset Management for up to $485M

($245.19billion) agreed to acquire GEAsset Management Inc. from GeneralElectric Co. in a cash transaction with a purchase price of $435million, subject to adjustments, with up to an additional $50 million tied toincremental opportunities with GE, according to a Form 8-K filed March 30.

GEannounced plans to sellits asset management arm, which has more than $100 billion in assets undermanagement for more than 100 institutional clients, in .

Thesale will bring GE Asset Management's active management, alternatives andOutsourced Chief Investment Officer capabilities to State Street GlobalAdvisors. In addition, the transaction is expected to increase State StreetGlobal Advisors' assets under management by approximately $100 billion uponclosing and add new alternatives capabilities, while strengthening existingfundamental equity and active fixed income teams.

StateStreet Global Advisors will assume responsibility to manage the assets relatedto GE's primary benefit plans currently managed by GE Asset Management —including the GE pension plan — in addition to those of GE Asset Management'sthird-party client base, subject to client consents.

Theexisting GE Asset Management team is expected to join State Street GlobalAdvisors as part of the transaction, with the exception of a small number ofemployees who will stay with GE to provide investment oversight of GE's primarybenefit plans. Toprovide a smooth transition for clients, the core investment and relationshipmanagement teams serving GE's benefit plans and other clients will continue todo so as part of State Street Global Advisors following the closing.

Anindependent fiduciary, Evercore Trust Co. NA, reviewed the transaction andapproved State Street Global Advisors' engagement to manage the assets relatedto the GE pension plan currently managed by GE Asset Management. GE will retainresponsibilities as plan sponsor and fiduciary for its plans going forward.

Thedeal is expected to be finalized early in the third quarter, pending regulatoryapprovals and other customary closing conditions. The sale will not change thebenefits received by participants in the GE pension plan, or any affiliatepension plan,, and does not change GE's requirement to meet its pension fundingobligations.

StateStreet expects the transaction to be accretive to operating-basis earnings pershare for the first full 12-month period following closing. Moreover, thecompany expects the targeted client asset retention rate to be greater than90%. In the first full 12-month period following the close of the transaction,fee revenue from the transaction is expected to be approximately $270 millionto $300 million. The company also expects total projected merger andintegration costs to be between $70 billion to $80 million through 2018.

Thetransaction is expected to result in a reduction of 40 basis points to 50 basispoints to State Street's fully phased-in risk-based capital ratios under bothstandardized and advanced approaches and of approximately 15 basis points to 20basis points to its fully phased-in tier 1 leverage and supplementary leverageratios.

StateStreet also expects to issue preferred shares prior to the close of thetransaction to offset the impact on its leverage ratios and, with thatissuance, does not expect the closing of the transaction to have any materialimpact on its common stock repurchase program.

Netsale proceeds from the transaction will be deposited into the GE Pension Trust,increasing trust assets used to pay GE pension plan benefits.

GEis being represented in this transaction by Credit Suisse.