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
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 &
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,
(2) the expected pretax gain from the sale,
(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
Alan Gulick, 206-500-2760
Investor Relations Contact:
Alan Magleby, 206-490-5182
SOURCE: Washington Mutual, Inc.