COLUMBUS, Ohio, Dec. 21 /PRNewswire-FirstCall/ -- Nationwide Financial
Services, Inc. (NYSE: NFS) and Nationwide Mutual Insurance Company today
announced that they have reached a preliminary understanding on certain of
the key terms for the purchase by Nationwide Financial of the
Philadelphia-based operations of NWD Investment Management, Inc., formerly
Gartmore Global Investments, Inc. This follows the announcement by both
companies last month that they were in discussions regarding the retail
asset management business of NWD Investment Management.
"Investment management remains an important part of the Nationwide
strategy to help consumers," said Jerry Jurgensen, Nationwide CEO. "This
transaction will better align our solid mutual fund business with
Nationwide Financial's industry-leading long-term savings and investment
capabilities, helping consumers prepare for and live in retirement."
Total consideration in the transaction will be $200 million in cash,
plus an amount equal to the tangible shareholders' equity on the balance
sheet at closing.
"This transaction will be an important step in Nationwide Financial
becoming a more comprehensive provider of financial services products,"
said Mark R. Thresher, president and chief operating officer of Nationwide
Financial. "It will enable us to leverage the Nationwide brand, our
extensive distribution, and our core investment and packaging
capabilities."
The Philadelphia-based business of NWD Investment Management includes
approximately $27.1 billion in managed assets. Nationwide Financial's
primary interest is in NWD Investment Management's approximately $25
billion of mutual fund assets, of which approximately $13 billion is
sub-advised by third parties. Nationwide Financial expects to transition
all of NWD Investment Management's retained assets to a sub-advised
platform, maintaining as much continuity with key portfolio managers as
possible.
The proposed transaction does not include NWD Investment Management's
institutional asset management businesses, which are comprised of Morley
Financial Services, Inc. (formerly Gartmore Morley Financial Services,
Inc.); NorthPointe Capital, LLC; Riverview Alternative Investment Advisors,
LLC (formerly Gartmore Riverview, LLC); and Nationwide Separate Accounts,
LLC (formerly Gartmore Separate Accounts, LLC). Nationwide Mutual is
reviewing its strategic options for these remaining asset management
businesses.
The preliminary understanding has been approved by the special
committees of the boards of both companies. The transaction is subject to
the negotiation of a definitive acquisition agreement, the completion by
each special committee of its review of the transaction, a recommendation
of the transaction by each special committee to its board and the approval
of each board. The closing of the transaction will require the approval of
the boards of trustees and the shareholders of the affected mutual funds.
The transaction is expected to close during the second quarter of 2007.
Overall, the transaction is expected to be modestly accretive to Nationwide
Financial. However, the impact to Nationwide Financial's 2007 net operating
earnings is not expected to be significant due to the expected timing of
the closing.
Credit Suisse is acting as the financial advisor for Nationwide
Financial's special committee, with Sidley Austin LLP serving as its legal
advisor. Goldman Sachs & Co. is acting as the financial advisor for
Nationwide Mutual's special committee, with Sullivan & Cromwell LLP acting
as its legal advisor.
Forward-Looking Information
The information included herein contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995 with respect to the results of operations and businesses of the
Nationwide Financial Services, Inc. and subsidiaries (NFS or collectively,
the Company). These forward-looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially
from those contemplated or projected, forecast, estimated or budgeted in
such forward-looking statements include, among other, the following
possibilities: (i) change in Nationwide Corporation's control of the
Company through its beneficial ownership of 94.6% of the combined voting
power of all the outstanding common stock and 63.9% of the economic
interest in the Company; (ii) the Company's primary reliance, as a holding
company, on dividends from its subsidiaries to meet debt service
obligations and the applicable regulatory restrictions on the ability of
the Company's subsidiaries to pay such dividends; (iii) the potential
impact on the Company's reported net income and related disclosures that
could result from the adoption of certain accounting and/or financial
reporting standards issued by the Financial Accounting Standards Board, the
SEC or other standard-setting bodies; (iv) tax law changes impacting the
tax treatment of life insurance and investment products; (v) repeal of the
federal estate tax; (vi) heightened competition, including specifically the
intensification of price competition, the entry of new competitors and the
development of new products by new and existing competitors; (vii) adverse
state and federal legislation and regulation, including limitations on
premium levels, increases in minimum capital and reserves and other
financial viability requirements, restrictions on mutual fund distribution
payment arrangements such as revenue sharing and 12b-1 payments, and
regulation changes resulting from industry practice investigations; (viii)
failure to expand distribution channels in order to obtain new customers or
failure to retain existing customers; (ix) inability to carry out marketing
and sales plans, including, among others, development of new products
and/or changes to certain existing products and acceptance of the new
and/or revised products in the market; (x) changes in interest rates and
the equity markets causing a reduction of investment income and/or asset
fees, an acceleration of the amortization of deferred policy acquisition
costs (DAC) and/or value of business acquired (VOBA), reduction in separate
account assets or a reduction in the demand for the Company's products;
(xi) reduction in the value of the Company's investment portfolio as a
result of changes in interest rates and yields in the market as well as
geopolitical conditions and the impact of political, regulatory, judicial,
economic or financial events, including terrorism, affecting the market
generally and companies in the Company's investment portfolio specifically;
(xii) general economic and business conditions which are less favorable
than expected; (xiii) competitive, regulatory or tax changes that affect
the cost of, or demand for, the Company's products; (xiv) unanticipated
changes in industry trends and ratings assigned by nationally recognized
rating organizations; (xv) settlement of tax liabilities for amounts that
differ significantly from those recorded on the balance sheet; (xvi)
deviations from assumptions regarding future persistency, mortality
(including as a result of a pandemic illness, such as Avian Flu), morbidity
and interest rates used in calculating reserve amounts and in pricing the
Company's products; and (xvii) adverse litigation results and/or resolution
of litigation and/or arbitration or investigation results that could result
in monetary damages or impact the manner in which the Company conducts its
operations; and (xviii) adverse consequences, including financial and
reputation costs, regulatory problems and potential loss of customers
resulting from failure to meet privacy regulations and/or protect the
Company's customers' confidential information.
About Nationwide Financial(R)
Nationwide Financial Services, Inc. (NYSE: NFS), a publicly traded
company based in Columbus, Ohio, provides a variety of financial services
that help consumers invest and protect their long-term assets, and offers
retirement plans and services through both public- and private-sector
employers.(1)
It's part of the Nationwide group of companies, which offers
diversified insurance and financial services. The group is led by
Nationwide Mutual Insurance Company, which is ranked No. 98 on the Fortune
100 based on 2005 revenue.(2) For more information, visit
http://www.nationwide.com.
About Nationwide Mutual
Nationwide Mutual, based in Columbus, Ohio, is one of the largest
diversified insurance and financial services organizations in the world,
with more than $158 billion in assets. Nationwide ranks #98 on the Fortune
100 list. The company provides a full range of insurance and financial
services, including auto, motorcycles, boats, homeowners, life, commercial
insurance, administrative services, annuities, mortgages, mutual funds,
pensions and long-term savings plans. The Nationwide companies include the
country's seventh-largest property/casualty insurer, the fourth-largest
homeowners' insurer, the sixth- largest auto insurance group and the
country's largest farm owners' insurer. Nationwide Life Insurance Company,
the major subsidiary of Nationwide Financial, ranks 11th in assets
according to A.M. Best. For more information, visit http://www.nationwide.com.
About NWD Investment Management
NWD Investment Management, Inc. is the asset management business of
Nationwide Mutual Insurance Company. Located outside Philadelphia,
Pennsylvania, NWD Investments manages more than $49.4 billion(3) in assets
through its investment management platform driven by 61 investment
management professionals and supported by a staff of more than 250. NWD
Investments provides core and specialty equity, fixed-income and
alternative investment solutions through mutual funds, separate accounts,
commingled portfolios and wrap accounts to individual and institutional
clients. For more information, please visit http://www.nwdfunds.com.
Nationwide, Nationwide Financial and the Nationwide Framemark are
federally registered service marks of Nationwide Mutual Insurance Company.
On Your Side is a service mark of Nationwide Mutual Insurance Company.
(1) Nationwide Investment Services Corporation, member NASD. In MI only:
Nationwide Investment Svcs. Corporation.
(2) Fortune Magazine, April 2006
(3) As of Sept. 30, 2006
Contacts:
Jeff Botti (614) 249-6339
bottij@nationwide.com
Erica Lewis (614) 249-0184
lewise6@nationwide.com
SOURCE Nationwide Financial Services, Inc.
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Related links:
http://www.nationwidefinancial.com
http://www.nwdfunds.com
http://www.prnewswire.com/comp/607050.html /
CONTACT:
Jeff Botti, +1-614-249-6339, or
bottij@nationwide.com, or Erica Lewis, +1-614-249-0184, or
lewise6@nationwide.com, both of Nationwide Financial Services,
Inc.
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