Principal to sell mortgage business to Citigroup for $1.26b.Principal Financial Group Inc. has agreed to sell its mortgage-banking business to Citigroup Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. for $1.26 billion, as of April 30, saying the sale will help it focus on its core retirement and risk-protection businesses. Under the terms of the definitive agreement, Citigroup would acquire the stock of Principal Residential Mortgage Inc., and Principal would transfer its entire mortgage-banking business to the company. The transaction includes an estimated $290 million in premium over the book value transferred to Citigroup, said Jeff Rader Rader is a surname, and may refer to: In law:
Principal anticipates after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to be about $710 million, which will be used primarily for organic growth of its core businesses, strategic acquisitions and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . "As difficult as this decision was, we're we're Contraction of we are. we're we are extremely excited about the outcome and the benefits for all parties involved," J. Barry Griswell, chairman, president and chief executive officer of Principal, said during a conference call. Principal Financial Estimated 2005 Earnings Mix *: Principal International 5% Institutional Spread 17% Life & Health 31% 401(k) Mutual Funds, & Individual Annuities 42% Principal Global Investors 5% * Excludes corporate & other segment, post-deal. Source: UBS estimates. Note: Table made from pie chart. |
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