Mellon Financial Corp., which plans to get out of the venture capital business altogether this quarter, has sold most of its venture capital arm.
The Pittsburgh banking company said Wednesday in an 8-K filing with the Securities and Exchange Commission that the Dec. 29 sale of Mellon Ventures to Goldman Sachs Private Investments Ltd. resulted in a fourth-quarter after-tax loss of $70 million. But it said the loss was offset by a tax benefit of about $75 million from reinvesting earnings from overseas subsidiaries.
Mellon, which is to report earnings Jan. 17, has devoted more attention to its asset servicing and asset management businesses in recent years and is poised to merge with Bank of New York Co. Inc. in the second half of 2007. The two say Bank of New York Mellon Corp. would be the world's largest custodian, with $16.6 trillion of assets under custody.
Ron Sommer, a Mellon spokesman, said the sale of Mellon Ventures came at the "tail end" of a fine-tuning of the venture capital business that was initiated in early 2004, when Mellon said it would make no new investments.
"We've been on this track for the last couple of years," Mr. Sommer said. "We made the determination that the best outcome would be in effect to exit the business."
Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners LP, said: "I'm not terribly surprised that they're choosing to get out. The venture capital business created a fair bit of volatility in earnings."
Mellon's chief executive, Robert P. Kelly, who is to be Bank of New York Mellon's CEO, is "focused on streamlining" the Pittsburgh company's core business operations and "improving the consistency of earnings," Mr. Fitzgibbon said.
Gerard Cassidy, an analyst at Royal Bank of Canada's RBC Capital Markets, said: "We view this announcement favorably over the long term, as it removes one of the lines of business that was not a focus. The leaner and more focused the businesses, the better the combination of the two companies in the second half of 2007 and going into 2008."
In a separate 8-K filing Wednesday, Mellon said Stephen Canter, 61, retired Dec. 28 as vice chairman of Mellon Financial and chief executive of Dreyfus Corp. Mellon announced Dec. 8 that Mr. Canter would retire at the end of the year.
Thomas Eggers, Dreyfus' president and chief operating officer, has taken on the role of CEO. Jon Little, the chief executive of Mellon Global Investments, will be named Dreyfus' chairman. Dreyfus has more than $190 billion of assets under management.
Shares of Mellon rose 1% Wednesday. It was the stock's biggest gain since Dec. 4.
