Des Moines, Iowa (May 14, 2004) -- The Principal Financial Group Inc. sold its mortgage banking business to Citigroup for $1.26 billion this week in a move aimed at sharpening its focus on its core business of providing retirement and employee benefit solutions for small and midsized companies.
Under the terms of the agreement, Citigroup will acquire the stock of Principal Residential Mortgage Inc., and Principal Residential Mortgage employees will transfer to Citigroup at the close. The transaction, which has been approved by Principal's board of directors, is expected to close in third quarter, subject to regulatory approval.
"In addition to greater focus on our core businesses, we go forward from an improved capital position, with better financial flexibility and greater stability of earnings," J. Barry Griswell, Principal chairman, president and chief executive, said in a statement.
The Fortune 500 company reported $149.8 billion in assets under management as of March 31.
The Principal, which expects after-tax net proceeds of about $710 million, said that it plans to use the money for growth of its core businesses, strategic acquisitions and share repurchases. The company's board this week authorized the repurchase of up to $700 million of the company's outstanding common stock. Principal said that it has completed approximately $253 million of the $300 million share repurchase program authorized by the board last May.
-- WebCPA staff
