State Street Corp. wants to amend the transaction terms of its proposed acquisition of Brown Brothers Harriman & Co.'s investor services business based on discussions with U.S. banking regulators, Chairman and CEO Ronald O'Hanley said during the second-quarter earnings call July 15.

State Street intends to finalize the proposed new structure and contractual terms during the third quarter and confirm the approach with regulators, O'Hanley said. The modifications must also be approved by the board of directors at both BBH and State Street.

The modifications include an amendment to the purchase price and changes to the operating model and regulatory approvals. At the heart of the review is the legal entity structure of the combined entity, CFO Eric Aboaf said. Since State Street runs a holding company, a series of banks and other entities globally, it is looking to create a "workable and good path of combination" in different ways, Aboaf said.

The acquisition was announced in September 2021 at a deal value of $3.5 billion. State Street is seeking changes to the purchase price since it wants to preserve the economic accretion it had previously disclosed when the deal was announced, Aboaf said.

The parties initially expected to close the deal in June 2022 but are now aiming for the end of the fourth quarter. After Sept. 6, one year since the deal agreement was signed, either company can terminate the transaction without penalty, absent further agreement between the parties, O'Hanley said.

"The regulatory world and the political world has changed significantly since we announced this deal and what we're looking towards [is] a way to break through and close it in a reasonable time period," O'Hanley said. "This time period doesn't seem reasonable to anybody, but it's actually better than some of the alternatives that we've been faced with."