Principal Financial Group has announced a definitive agreement with Wells Fargo & Company to acquire its Institutional Retirement & Trust businesses. Principal will assume ownership of Wells Fargo’s DC, DB, executive deferred comp, ESOP, institutional trust and custody, and institutional asset advisory businesses.
Under the agreement, the purchase price is $1.2 billion. The agreement also includes an earnout of up to $150 million tied to better-than-expected revenue retention, payable two years after closing – which is anticipated in the third quarter of 2019.
The acquisition will double the size of its Principal’s U.S. retirement business as measured by the number of total recordkeeping assets. Principal will gain a strong foothold with mid-sized employers, as more than two-thirds of Wells Fargo’s institutional retirement assets are in plans ranging from $10 million to $1 billion.
As of Dec. 31, 2018, Wells Fargo’s retirement businesses had $827 billion in assets under administration served by approximately 2,500 employees in locations across the U.S., Philippines and India.
“Retirement is at the heart of our business and core to our future,” said Dan Houston, chairman, president and CEO of Principal in a statement released April 9. “This will be a powerful combination for customers, employees and shareholders as we solidify our place as a top-three leader in the U.S. retirement market. The acquisition will bring expanded capabilities, reach and scale; fueling our ability to compete, invest and grow to help more people to achieve their retirement outcomes.”