State Street Boston Corp. has retained Goldman, Sachs & Co. to defend against a potential takeover attempt, investment bankers say.
The Boston trust specialist, whose stock recently surged on rumors that Bank of New York Co. might acquire it, is using Goldman "to stand by and consider defensive strategy as needed," said one investment banker.
Goldman and State Street have a long history of working together as the bank has rapidly expanded its securities processing and asset management business by acquiring other firms in recent years.
Last week Bank of New York announced it would double its stake in State Street. Although Bank of New York said it was purchasing the shares because it considered them a good investment, the size and cost of the purchase has caused some analysts to believe the bank ultimately has a merger in mind. State Street has said it intends to remain independent.
Sources say Bank of New York has not hired a financial adviser. A spokesman at the bank refused to comment.
The head of bank merger advisory at Goldman, J. Christopher Flowers, declined to comment on his investment bank's relationship with State Street. But the two companies have a longstanding relationship.
Goldman advised the bank on its purchase of Princeton Financial Systems in October and on its acquisition of Investors Fiduciary Trust Co. in 1994.
Goldman was also adviser when State Street sold its credit card business to Household International Inc. in 1991. The investment bank also served as lead manager on the rare occasions State Street has issued bonds.
Goldman was the leading bank M&A adviser in 1996 with $10.3 billion worth of deals, according to Securities Data Co. Goldman advised Boatmen's Bancshares Inc. in its sale to NationsBank Corp.
In the past the Wall Street giant also has advised banks seeking to fend off unwanted buyers.
In 1988 Goldman, along with J.P. Morgan & Co., co-advised Irving Bank Corp. in its unsuccessful effort to avoid a hostile takeover by Bank of New York.
Advisers found an Italian bank to make an bid for Irving, but in the end, Bank of New York prevailed.