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WF - Principal Financial Group: Nothing Wrong With Growing Inorganically
Woori Bank American Depositary Shares
On April 9th, Principal Financial (PFG) announced an agreement to acquire Wells Fargo's (WF) Institutional Retirement & Trust division at a net purchase price of $1.05 billion.
PFG plans to finance the deal through a combination of debt ($0.4-$0.5 billion) and cash. Management has estimated that the buyout will result in net revenues of $425 million and create a $100 million bump in earnings by 2022. It also expects pre-tax margins to expand from 22-23% to 28-32% once the retirement business becomes fully integrated due to scale and cost synergies.