DST Systems swaps its State Street shares in a nontaxable deal

Kansas City-based DST Systems has found a use for $157.6 million of dollars of State Street stock it owns, swapping it for full ownership of a joint venture the companies share.

DST Systems said it also agreed to pay $175 million in cash for State Street’s half-interest in another joint venture the companies share. Combined, the transactions are worth $332.6 million and are expected to boost DST’s revenues by $660 million the first year.

The ventures are called Boston Financial Data Services Inc. and International Financial Data Services Limited in the United Kingdom. Both ventures provide various services to financial firms. DST will become the 100 percent owner of each.

In the deal for Boston Financial Data, DST is swapping 2 million shares of State Street that it owns, rather than paying cash. The announcement said this swap – shares for a business – makes the transaction nontaxable.

DST said the deals will boost its operating income by $40 million the first year. It additionally expects to save $20 million in costs from synergies in the first 18 months after the Boston Financial deal is completed in a few days.

State Street and DST continue their joint venture that operates in Canada, Ireland and Luxembourg.

Read more: Kansas City Star


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