SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 17, 1998
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INVESTORS FINANCIAL SERVICES CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-26996 04-3279817
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(State or other jurisdiction of (Commission file (I.R.S. Employer
incorporation or organization number) Identification No.)
200 Clarendon Street, Boston, MA 02116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 330-6700
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No change since last report
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(Former name or address, if changed since last report)
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Item 5. Other Events.
On July 17, 1998, Investors Bank & Trust Company (the "Buyer"), a
wholly-owned subsidiary of Investors Financial Services Corp. (the
"Corporation"), entered into a Purchase and Sale Agreement (the "Agreement")
with Bank Boston, N.A. ("Seller") pursuant to which the Buyer will purchase (the
"Acquisition") from Seller substantially all of the assets of Seller solely
relating to Seller's institutional trust and custody business (the "Business").
The Business is comprised of approximately $45 billion in assets under custody.
The aggregate purchase price (the "Purchase Price") to be paid by Buyer
for the Business is approximately $50 million. A deposit of $1 million was made
by Buyer upon the signing of the Agreement and may be retained by Seller if
Buyer fails to close the Acquisition under certain circumstances. An additional
$43 million plus the amount of accounts receivable of the Business at Closing
will be paid at Closing. Buyer will pay up to an additional $6 million to Seller
based upon the level of client retention at the one year anniversary of the
Closing. The terms of the Acquisition, including the Purchase Price, are the
result of arm's length negotiations between the representatives of Seller and
Buyer.
The Acquisition is expected to be accounted for as a purchase. While the
Buyer is able to fund the transaction from internal resources, the Buyer expects
to raise approximately $25 million in an equity offering during the third
quarter of 1998. The Buyer expects the transaction to be accretive to earnings
per share after the successful integration of staff, systems and facilities in
1999.
The Closing of the Acquisition is subject to customary closing conditions,
the expiration or early termination of the applicable Hart-Scott-Rodino waiting
period and certain regulatory approvals. Subject to the satisfaction of the
foregoing conditions, Buyer and Seller intend the Closing to occur on or about
September 30, 1998.
In connection with the Acquisition, on July 17, 1998 Buyer and Seller also
entered into an Outsourcing Agreement (the "Outsourcing Agreement"). Pursuant to
the Outsourcing Agreement, effective upon the Closing, Seller will appoint Buyer
custodian to provide certain custody and other services to Seller's
approximately $25 billion assets under management. The terms of the Outsourcing
Agreement, including the fees of Buyer thereunder, are the result of arm's
length negotiations between the representatives of Seller and Buyer.
Buyer issued a press release regarding the Acquisition on July 20, 1998. A
copy of the press release is attached as Exhibit 99.1 to this Current Report on
Form 8-K and is incorporated herein by reference.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of the Corporation, dated July 20, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INVESTORS FINANCIAL SERVICES CORP.
By: /s/ Kevin J. Sheehan
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Kevin J. Sheehan
President, Chief Executive Officer,
and Chairman of the Board
Dated: July 20, 1998
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release of the Company, dated July 20, 1998.
EXHIBIT 99.1
INVESTORS FINANCIAL SERVICES CORP. TO PURCHASE BANKBOSTON'S DOMESTIC
INSTITUTIONAL CUSTODY BUSINESS
Contact: Karen C. Keenan
(617) 330-6001
[email protected]
BOSTON, MA, July 20, 1998- Investors Financial Services Corp. (Nasdaq: IFIN)
today announced it has signed a definitive agreement to purchase the domestic
institutional custody business of BankBoston, N.A. Under the terms of the
agreement, the Company will pay up to $50 million for the business, $44 million
to be paid at closing and up to an additional $6 million to be paid twelve
months later based upon client retention.
BankBoston's domestic institutional custody business, comprised of
approximately $45 billion in assets under custody, will become part of Investors
Bank & Trust Company(R), a wholly owned subsidiary of Investors Financial
Services Corp. In addition, the Company has entered into an outsourcing
agreement that calls for BankBoston to use Investors Bank & Trust Company for
the settlement and depository functions of its $25 billion asset management
business, with BankBoston retaining investment management and administrative
responsibilities for its clients. Upon completion of the transaction, assets
processed by the Company for clients will total approximately $234 billion, a 68
percent increase from the level of assets processed at December 31, 1997. The
Company expects the transaction to be completed by September 30, 1998.
The 106 employees of BankBoston's domestic institutional custody business
will be offered the opportunity to remain with the business as employees of
Investors Bank & Trust Company. The Company will move the BankBoston custody
business from its current location in Canton, Massachusetts to the Company's
Boston headquarters. Both banks intend to move quickly to ensure a smooth
transition with minimal disruption to clients and employees. The Company expects
the transaction to be accretive to earnings per share after the successful
integration of staff, systems and facilities in 1999.
~ MORE ~
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"We have enjoyed a long-standing business relationship as a client of
BankBoston's commercial banking and Brazilian custody operations," stated Kevin
J. Sheehan, President and Chief Executive Officer. "Our core strategy of
providing superior professional client service is an excellent fit for the
employees and customers of BankBoston's domestic institutional custody business.
We think that these clients will benefit from the additional services offered by
the Company. In addition, these transactions will add greater depth and
diversity to our client base, while continuing the profitable growth in assets
processed that we have achieved over the past several years. We look forward to
a continued client partnership with BankBoston."
BankBoston (NYSE: BKB), with assets of $71.4 billion and some 23,000
employees is the nation's oldest commercial bank and New England's only global
bank. BankBoston is engaged in consumer, small business and corporate banking in
New England; delivering sophisticated financial solutions to corporations and
governments nationally and internationally; and full-service banking in leading
Latin American markets.
Investors Financial Services Corp. provides asset administration services
for the financial services industry through its wholly-owned subsidiaries,
Investors Bank & Trust Company and Investors Capital Services, Inc. The Company
provides global custody, multicurrency accounting, institutional transfer
agency, performance measurement, foreign exchange, securities lending, mutual
fund administration and investment advisory services to financial asset
managers, including mutual fund complexes, investment advisors, banks and
insurance companies.
