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Rating:DST Officially Swallows ALPS Not Rated 2.0 Email Routing List Email & Route  Print Print
Wednesday, November 2, 2011

DST Officially Swallows ALPS

Reported by Neil Anderson, Managing Editor

DST just officially acquired ALPS, and the Kansas City, Missouri-based mutual fund back-office giant already expects ALPS to add $0.22 per share to its earnings next year. That's just one of the tidbits DST revealed in its third-quarter earnings release [see the earnings call transcript].

DST first unveiled the $250-million ALPS deal on July 19, and it closed on Monday, with Morgan Stanley advising ALPS. Denver-based Lovell Minnick Partners, which bought a minority stake in ALPS six years ago issued its own statement on the deal.

Separately, DST's board of directors issued another release to say that it "has unanimously determined that continuing to execute on the company's business plan and strategy is in the best interests of DST and its shareholders." The board hinted at further acquisitions and partnerships, as well as divestments, and it also unveiled a two-million-share continuation of its share repurchase program.

On the earnings side, in the third quarter DST's mutual fund shareowner processing business' total accounts dipped by 10.6 million to 101.2 million on September 30.

Company Press Release

DENVER, Nov 02, 2011 -- Lovell Minnick Partners today announced that it has completed the previously announced sale of ALPS Holdings, Inc. (ALPS), a leading provider of asset servicing and asset gathering solutions to the asset management industry, to DST Systems, Inc. DST -4.80% for $250 million.

ALPS has been a portfolio company of Lovell Minnick Partners since September 2005 when the private equity firm acquired a majority interest. Lovell Minnick President and Managing Director, Jim Minnick, commented, "It has been a pleasure to work with Ned Burke and the rest of the ALPS team over the last six years and we wish them well in their new partnership with DST." Spencer Hoffman, Managing Director at Lovell Minnick, added, "We have enjoyed an outstanding partnership with ALPS and congratulate them on the successful transaction with DST."

Morgan Stanley & Co. LLC served as the exclusive financial advisor to ALPS for the transaction.

About Lovell Minnick Partners LLC

Lovell Minnick Partners LLC is a private equity firm providing buyout and growth capital to companies in the financial services industry. From offices in the Los Angeles and Philadelphia areas, Lovell Minnick manages private equity partnerships totaling $800 million on behalf of qualified private and institutional investors. Portfolio companies of Lovell Minnick operate in various areas of the global financial services industry, including asset management, financial product distribution, outsourced administration services, securities brokerage and investment banking, financial consulting, and commercial and trust banks. For more information about Lovell Minnick, please visit www.lovellminnick.com .

About ALPS Holdings, Inc.

Headquartered in Denver with offices in Boston, New York, and Seattle, ALPS is a 25-year-old financial services firm focused on asset servicing and asset gathering. With more than 300 employees, nearly 200 clients, and an executive team that has been in place for over 16 years, ALPS continues to actively promote all of its various business segments, from asset servicing through ALPS Fund Services, Inc. to asset gathering through ALPS Distributors, Inc. and ALPS Advisors, Inc. As of December 31, 2010, the firm managed more than $3.275 billion in assets and provided servicing to more than $291 billion in client assets. For more information about ALPS and the services available, visit www.alpsinc.com . For additional information about ALPS products, visit www.alpsfunds.com .

About DST Systems, Inc.

DST Systems, Inc. provides sophisticated information processing solutions and services to support the global asset management, insurance, retirement, brokerage, and healthcare industries. In addition to technology products and services, DST also provides integrated print and electronic statement and billing solutions through DST Output. DST's world-class data centers provide technology infrastructure support for asset management, insurance and healthcare companies around the globe. Headquartered in Kansas City, MO., DST is a publicly traded company on the New York Stock Exchange.

SOURCE: Lovell Minnick Partners LLC

Company Press Release

KANSAS CITY, Mo., Nov. 2, 2011 -- DST Systems, Inc. (NYSE: DST) today announced that following a comprehensive review of the Company's business plan, assets and investment portfolio, its Board of Directors has unanimously determined that continuing to execute on the Company's business plan and strategy is in the best interests of DST and its shareholders.  

DST's growth strategy is to leverage its technology-differentiated solutions to support its customers' information management, business process and customer relationship needs.  The Board is confident that the Company's focus on five key industry verticals of asset management, brokerage, retirement, insurance and healthcare, as well as the development and delivery of customer communications through both print and electronic media will enhance shareholder value.  The Company is committed to driving future growth by continuing to increase scale, efficiencies and competitiveness, as well as expanding its product and service offerings.  

DST will continue to explore synergistic acquisitions, strategic partnerships and additional investments in areas that enhance the Company's existing technology offerings and create new solutions that meet customers' needs.  Most recently, the Company completed its $250 million acquisition of ALPS Holdings, Inc., which broadens the range of products and services DST offers to the investment management and brokerage industries, including a suite of asset-servicing and asset-gathering solutions.  The acquisition of ALPS will be accretive to DST's reported and cash earnings per share in 2012.

Through its ongoing review, DST's Board identified strategic opportunities to further strengthen its business, adjust its capital structure and create value for shareholders.  These opportunities include, among others:

  • Monetizing certain of the Company's non-operating assets and investments, subject to market timing, pricing and tax efficiency considerations;

  • Enhancing the outlook and performance of certain business units through additional investments and strategic partnerships;

  • Returning capital to shareholders through additional share repurchases where excess cash from operations and monetization proceeds are not needed to pay down debt or other obligations or to generate greater returns by growing the Company's business organically or through acquisitions or strategic partnerships; and

  • Improving the transparency and frequency of communications with the Company's shareholders and analysts, including providing additional information regarding the Company's unconsolidated affiliates and passive investments, such as its real estate assets.

    DST has a long and successful history of returning capital to shareholders through significant share repurchases and a semi-annual cash dividend, which was instituted in 2010.  Since January 1, 2005, DST has repurchased approximately 46.2 million shares, representing approximately 51.1% of the total shares outstanding, for total consideration of approximately $2.7 billion.  During the third quarter of 2011 and through October 31, 2011, the Company repurchased 2.5 million shares for an aggregate consideration of $112.9 million.  

    Continuing this strategy, DST's Board has authorized an additional share repurchase program of 2 million shares of its common stock.  The new share repurchase program will become effective on January 1, 2012 and expire on December 31, 2013.  Stock repurchases may be made from time-to-time pursuant to this program, in the open market or through privately negotiated transactions or other means, at management's discretion, depending on market conditions and other factors, in accordance with Securities and Exchange Commission requirements.

    BofA Merrill Lynch and Skadden, Arps, Slate, Meagher & Flom LLP are serving as independent financial and legal advisors, respectively, to DST's Board of Directors.  Stinson Morrison Hecker LLP is acting as legal advisor to the Company.

    The Company will discuss this announcement further on its third quarter 2011 financial results conference call to be held today at 7:30 A.M. Central Time. As previously announced, the dial-in number for domestic callers is (888) 802-8577 and for international callers is (404) 665-9928. Callers should reference the access code of 19375257 or DST's Third Quarter Earnings Release.  Interested parties may also listen to the conference call via a live webcast from the DST Systems, Inc. website (www.dstsystems.com).

    Safe Harbor Statement

    Certain material presented in the press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, (i) all statements, other than statements of historical fact, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future or that depend on future events, or (ii) statements about our future business plans and strategy and other statements that describe the Company's outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance.  Whenever used, words such as "may," "will," "would," "should," "potential," "strategy," "anticipates," "estimates," "expects," "project," "predict," "intends," "plans," "believes," "targets" and other terms of similar meaning are intended to identify such forward-looking statements.  Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.  Factors that could cause results to differ materially from those anticipated include, but are not limited to, the risk factors and cautionary statements included in the Company's periodic and current reports (Forms 10-K, 10-Q and 8-K) filed from time to time with the Securities and Exchange Commission.  All such factors should be considered in evaluating any forward-looking statements.  The Company undertakes no obligation to update any forward-looking statements in this press release to reflect new information, future events or otherwise.

    SOURCE DST Systems, Inc. 

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