Principal Financial to shop for Wells Fargo’s retirement unit for $1.2 billion

(Reuters) – Top U.S. retirement plan administrator Principal Financial Group (NASDAQ:PFG) said it would buy Wells Fargo (NYSE:WFC) & Co's retirement plan services business for $1.2 billion, since it seeks a much better presence in markets serving mid-sized companies.

The agreement includes an earnout of up to $150 million linked with better-than-expected revenue retention, payable eighteen months after closing, likely while in the third quarter, Principal Financial said.

"Principal will get a strong foothold with mid-sized employers fat loss than two-thirds of Wells Fargo's institutional retirement assets have been in plans cover anything from $10 million to $1 billion," the corporation said. https://reut.rs/2uRbzQ2

The deal will probably be financed with cash and debt and definately will increase net income and adjusted earnings per portion of 2020, Principal Financial said.

Wells Fargo continues to be planning to trim its business from the moment it was the target of regulatory scrutiny carrying out a sales practice scandal. In 2018, the federal government Reserve slapped it by having an unprecedented asset cap, citing "widespread consumer abuses and compliance breakdowns".

The bank is scheduled to announce its first-quarter results on Friday.

Lazard will be the financial adviser to Principal, while Debevoise & Plimpton provided lawyer.