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Wells Fargo To Sell IRT Business To Principal Financial For $1.2 Bln

Financial services company Wells Fargo & Co. (WFC) announced Tuesday that Wells Fargo Bank, N.A. has agreed to sell its Institutional Retirement & Trust (IRT) business to Principal Financial Group (PFG) for a price of $1.2 billion. The deal also includes an earnout of up to $150 million tied to better than expected revenue retention, payable two years post-closing.

The IRT business includes its retirement plan recordkeeping and administrative services (401(k) and pension plans), executive deferred compensation (non-qualified plans), institutional trust and custody and institutional asset advisory businesses. As of December 31, 2018, IRT had $827 billion in assets under administration and served 3.9 million 401(k) participants and pensioners.

At closing, Principal will assume ownership of Wells Fargo's defined contribution, defined benefit, executive deferred compensation, employee stock ownership plans, institutional trust and custody and institutional asset advisory businesses and serve a combined 7.5 million U.S. retirement customers

The deal will make Principal Financial Group one of the largest retirement providers in the industry.

The sale also reflects Wells Fargo's strategy to focus its resources on areas where it can grow and maximize opportunities within wealth, brokerage and asset management.

The acquisition is expected to be accretive to Principal Financial's net income and adjusted operating earnings per diluted share in 2020 and will be financed with cash and senior debt financing.

The transaction, which is expected to close early in the third quarter of 2019, is subject to receipt of required regulatory approval. The financial details related to the transaction, including the sale's expected gain to Wells Fargo, will be disclosed when the transaction is completed.

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