NEW YORK - The Bank of New York Mellon Corporation (NYSE: NYSE:BK), a prominent financial services entity, has announced its acquisition of Archer Holdco, LLC, a provider of technology-driven managed account solutions, aiming to amplify its capabilities in the managed account sector. This strategic move, expected to finalize in the fourth quarter of 2024, is set to enhance BNY's offerings across manufacturing, distribution, and servicing within the managed account ecosystem.
Archer's state-of-the-art, cloud-based platform offers a versatile solution for asset and wealth managers, facilitating the expansion of distribution channels, operational streamlining, and the launch of new investment products. The integration of Archer's technology is projected to enable BNY to provide more comprehensive retail managed account solutions, leveraging its extensive footprint and expertise in the financial industry.
Emily Portney, Global Head of Asset Servicing at BNY, highlighted the rapid growth of managed accounts as investment vehicles, particularly for retail investors seeking customized portfolios. The acquisition is poised to position BNY as a more robust player in the managed account market, which is forecasted to exceed $8 trillion in assets in the U.S. within the next three years.
Archer will also augment the distribution of model portfolios through BNY Investments and BNY Pershing's Wove wealth platform for advisors, offering access to a multi-custodial network. Bryan Dori, President and CEO of Archer, emphasized the importance of multi-asset solutions and the role of Archer's expertise in supporting BNY's clients in achieving long-term growth.
The financial terms of the acquisition remain undisclosed, and the transaction is not expected to materially impact BNY's earnings or its projected capital returns. BofA Securities and Sullivan & Cromwell provided financial and legal advisory, respectively, to BNY, while Raymond James and DLA Piper served Archer in similar capacities.
The information is based on a press release statement, and the acquisition is subject to regulatory approvals and customary closing conditions.
In other recent news, Bank of New York Mellon (BNY Mellon) has agreed to a $5 million settlement with the U.S. Commodity Futures Trading Commission (CFTC) over charges related to swap transactions. As part of the settlement, BNY Mellon has committed to hiring an independent compliance consultant to evaluate and improve its compliance program.
In other developments, investment firm Pondera Holdings is exploring potential options for Whisker, a producer of automated cat litter boxes. The sale might place Whisker's value at approximately $1 billion, involving a potential recapitalization of the company.
BNY Mellon has also issued $2.5 billion in mixed rate notes, split into both fixed and floating rate securities. The issuance includes four series of notes with varying terms and interest rates.
Analysts have revised their outlook on BNY Mellon following a strong second quarter performance. Deutsche Bank (ETR:DBKGn) raised its price target to $63, while Goldman Sachs (NYSE:GS) increased its target to $74. However, Citi revised its stance from Buy to Neutral, setting a price target of $65.
Lastly, BNY Mellon's management has reiterated their forecast of a 10% full-year net interest income decline but remains "cautiously optimistic" for a more favorable outcome. The company has also returned over $900 million of capital to shareholders, emphasizing its commitment to shareholder returns.
InvestingPro Insights
The Bank of New York Mellon Corporation's (NYSE: BK) recent acquisition of Archer Holdco, LLC aligns with its financial trajectory and strategic market positioning. Notably, BNY Mellon has been demonstrating a strong financial performance with a remarkable return on assets over the last twelve months as of Q2 2024, standing at 0.8%. This is a testament to the company's efficient use of its asset base.
Investors may find BNY Mellon's commitment to shareholder returns particularly attractive. The company has not only maintained dividend payments for an impressive 54 consecutive years but has also seen a significant dividend growth of 27.03% in the last twelve months as of Q2 2024. This consistency is a key indicator of BNY Mellon's stable financial health and its prioritization of shareholder value.
An InvestingPro Tip that stands out in the context of this acquisition is that BNY Mellon is trading at a low P/E ratio relative to near-term earnings growth, with an adjusted P/E ratio as of Q2 2024 at 12.77. This suggests that the company's stock may be undervalued considering its earnings potential, making it an attractive pick for value investors.
Moreover, BNY Mellon's market capitalization stands robust at $49.99 billion, reflecting its significant presence in the financial services industry. The company's strategic moves, such as the Archer acquisition, are likely to further solidify its market position.
For readers interested in more detailed analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/BK. These tips provide deeper insights into BNY Mellon's performance metrics and investment potential.
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