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|Washington Mutual To Sell Mutual Fund Subsidiary To the Principal Financial Group|
SEATTLE--(BUSINESS WIRE)--July 25, 2006--Washington Mutual, Inc. (NYSE:WM) announced today that it has entered into a definitive agreement with the Principal Financial Group(R) for the sale of the capital stock of WM Advisors, Inc., -- investment manager of the WM Group of Funds -- and its subsidiaries for $740 million in cash, subject to closing adjustments.
The sale of WM Advisors, which had $26.4 billion in assets under management as of June 30, 2006, is expected to generate a pretax gain of at least $650 million.
The sale is expected to be completed during the fourth quarter of 2006. It is subject to approval by the funds' Board of Trustees and the funds' shareholders of various proposals related to the transaction. These proposals include, in some cases, mergers to integrate the funds into Principal Mutual Funds'(SM) existing funds.
"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 Washington Mutual Chairman and Chief Executive Officer Kerry Killinger. "The 'manufacturing' of retail mutual funds by WM Advisors is not part of our core business. We believe that The Principal is an ideal partner that will maintain and expand our customers' access to best-in-class mutual fund products."
Washington Mutual will continue to offer its customers mutual fund, annuity and retirement products through WM Financial Services, its broker-dealer subsidiary. After closing, The Principal is expected to offer mutual funds and annuity products to Washington Mutual customers through WM Financial Services, and the companies are actively exploring opportunities to collaborate on distribution of retirement products to Washington Mutual customers.
The gain from the sale will more than offset the 2006 financial impact of Washington Mutual's recently announced actions to accelerate strategic and productivity initiatives, including the sale of government and certain fixed-rate mortgage servicing rights, the relocation of back office operations to lower cost domestic and offshore locations, and the consolidation of real estate in higher cost domestic markets.
"By joining with The Principal, a leader in asset management, retirement and insurance solutions, fund shareholders as well as our businesses will benefit from new growth and distribution opportunities," said Bill Papesh, president of WM Advisors. "Approximately two-thirds of our current sales take place in our national sales channel and The Principal has an excellent product set and a service culture that will enhance the value we both provide to our customers."
WM Advisors was acquired by Washington Mutual in 1982. It began as Composite Research & Management Co. and launched one of the first 50 mutual funds in the United States in 1939.
Washington Mutual was represented in the transaction by financial advisors Morgan Stanley & Co. and its legal advisors Simpson Thacher & Bartlett LLP.
About Washington Mutual
Washington Mutual, through its subsidiaries, is one of the nation's leading consumer and small business banks. At June 30, 2006, Washington Mutual and its subsidiaries had assets of $350.7 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate more than 2,600 consumer and small business banking stores throughout the nation. Washington Mutual's press releases are available at www.wamunewsroom.com.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Washington Mutual, including:
(1) the expected effective date of the transaction,
(3) the timing and ability to obtain necessary approvals and consents, including the various approvals of the Board of Trustees of the WM Group of Funds, Principal's mutual funds, and fund shareholders of certain aspects of the transaction, and
(4) expectations as to the benefits to be realized by this transaction and Washington Mutual's relationship with The Principal.
These forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. There are a number of factors, many of which are beyond our control that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are described in detail in our Form 10-K for 2005 and Quarterly Report on Form 10-Q for the Period Ended March 31, 2006.
Before investing, you should carefully consider a fund's investment objectives, risks, charges, and expenses. Contact your Investment Representative or call 800-222-5852 to obtain a prospectus containing this and other information. Read the prospectus carefully before investing. Your investment's return and principal value will fluctuate, so it may be worth more or less upon redemption.
The WM Group of mutual funds is advised by WM Advisors, Inc., distributed by WM Funds Distributor, Inc., and sold through WM Financial Services, Inc. (all affiliates of Washington Mutual, Inc.) and independent broker/dealers.
CONTACT: Washington Mutual