Financial software giant SS&C announced Thursday its largest acquisition to date: a $5.4 billion cash purchase of DST Systems, a rival technology provider to asset managers, brokerages, retirement firms and health-care providers.
The acquisition expands SS&C's presence in the U.S. wealth management and retirement industries, as well as its overall scale, adding $3.9 billion in combined pro forma revenue and 13,000 clients.
Bill Stone, chairman and chief executive of SS&C, said in a statement that the acquisition will bring the automation and efficiencies from SS&C's software for institutional and alternative asset managers to DST's clients across the wealth management industry.
"The rate of change, the technology required, and the requirements of integrated solutions in the investment and wealth management space are unprecedented," Mr. Stone said. "The combination will position us to capitalize on the demand for outsourcing in financial services and better enable our clients to address increasing competitive and regulatory pressures."
Rahul Kanwar, executive vice president at SS&C, said his firm has traditionally focused on accounting, middle- and back-office needs, but said they've built some technology that wealth managers are looking for, like client portals, mobile apps and adviser-client interaction tools.
The purchase represents a continuation of SS&C's growth through acquisition. In October 2016, SS&C bought Salentica, a firm that provided client relationship management software to large wealth managers (firms with an average $3 billion in assets under management).
Before the DST acquisition, SS&C's largest purchase was in February 2015, when it spent $2.7 billion for Advent Software, which owns the Black Diamond portfolio management platform.
SS&C has a history of deals with DST. In 2014, the company acquired DST's data analytics unit for $95 million, according to Reuters.
SS&C expects to achieve $150 million a year in cost savings by 2020, but did not indicate if layoffs will play a role.
"I think it's too premature for us to be talking about layoffs," Mr. Kanwar said.
He said SS&C looks at acquisitions as a way to bring in "a great, incredibly talented workforce" who are experts in their field.
Mr. Stone agrees.
"We are ... excited to have the DST employees from around the world join the SS&C team and look forward to having a continued local presence in Kansas City," he said.