BNY Mellon Cleared to Sell Shareowner Services Business

The Bank of New York Mellon Corporation (NYSE:BK) received the green signal from U.S. regulators to proceed with the sale of its Shareowner Services business to Computershare over the weekend. ^[1] Computershare had inked the $550-million all-cash deal with BNY Mellon in April. The deal had to clear anti-trust law requirements, as BNY Mellon and Computershare are respectively ranked No.1 and No.2 in terms of U.S. market share size when it comes to transfer-agent services. ^[2] American Stock Transfer, Wells Fargo (NYSE:WFC) and Broadridge are other established transfer agents.

We have a $34 price estimate for BNY Mellon’s stock, which we are currently reviewing in light of market conditions and litigation risks for banks.

See our full analysis for BNY Mellon here

Shareowner Services represents the various equity solutions offered by financial institutions to their clients. These include record-keeping, corporate actions processing, dividend reinvestment and employee stock plan administration.

BNY Mellon reports its Shareowner Services revenues as a part of its Issuer Service business. While the exact numbers for the business are not specified, the bank reported a decline in Shareowner Services revenues in 2010 largely due to increased competition among the incumbents. This competition, combined with the small size of the business for the hugely diversified BNY Mellon, is what would likely have prompted the company’s decision to exit the Shareowner Services business at a reported “modest” net loss. ^[2]

The completion of the deal by the end of 2011 will see BNY Mellon’s capital grow by about $200 million.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Computershare to Proceed With Acquisition of BNY Mellon Shareowner Services, PRNewswire, Nov 6 2011 [↩]
2. Computershare bids for BNY Mellon unit, The Wall Street Journal, Apr 27 2011 [↩] [↩]