SEATTLE (AFX) - Washington Mutual Inc., the nation's largest savings and loan, made another divestiture Tuesday, announcing it will shed its mutual fund business to Principal Financial Group for $740 million.
The Seattle-based company said last week it intended to sell the WM Advisors Inc. asset management arm, which includes the WM Group of Funds with about $26.4 billion of assets. Principal Financial, an asset management firm that is one of the biggest U.S. managers of 401(k) plans, will pay cash in a deal expected to close during the fourth quarter.
The transaction comes after Washington Mutual, the nation's third-largest mortgage lender, announced it would sell 30 percent of its mortgage servicing rights to San Francisco-based Wells Fargo & Co. The thrift set off over the past few quarters to focus more on higher-margin products and cutting risk.
'This transaction is in keeping with our strategy to streamline our business model and sharpen the focus of our products and services which target U.S. middle-market consumers and small businesses,' said Chairman and Chief Executive Kerry Killinger in a statement.
The savings and loan expects a $650 million pretax gain on the unit's sale.
Washington Mutual acquired WM Advisors in 1982, which began as Composite Research & Management Co. and launched one of the first 40 mutual funds in the U.S. in 1939.
J. Barry Griswell, chairman and CEO of Principal Financial, said the purchase of WM Advisors will strengthen the company's global asset management capability and increase its presence with more than 28,000 independent financial advisors.
Washington Mutual fell 7 cents to close at $45.70 on the New York Stock Exchange. Principal Financial shares fell 6 cents to close at $54.24.
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