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Wells Fargo Buying Strong Assets
May 26, 2004
By THE ASSOCIATED PRESS
Filed at 10:25 a.m. ET
MENOMONEE FALLS, Wis. (AP) -- Wells Fargo & Co. is buying
all the assets of Strong Financial, whose founder and
principal owner was banned from the industry because of his
personal involvement in a trading scandal.
Terms for the sale of Strong's $34 billion in assets under
management, announced Wednesday morning, were not
disclosed. The Wall Street Journal reported Wednesday that
the transaction could be worth as much as $700 million.
The move came six days after Strong Financial and founder
and former CEO Richard Strong agreed to a combined $175
million penalty to settle regulators' allegations of
improper trading at the expense of other shareholders.
Wells Fargo and Strong Financial had been rumored to be in
talks for months, and the settlement had cleared the way
for a sale.
The settlement did not prohibit Richard Strong, who owns 85
percent of the privately-held company, from benefiting from
the sale.
The deal announced Wednesday does not include any legal
entities of Strong Financial, which is based in the
Milwaukee suburb of Menomonee Falls, the companies said.
Wells Fargo will gain $27 billion in assets in 70 mutual
funds. San Francisco-based Wells Fargo's total assets under
management would grow to $217 billion. Mutual fund assets
would climb to $103 billion, ranking among the top 20
mutual fund companies in the U.S., Wells Fargo said.
``This is a great strategic fit of investment talent,
resources, well-established investment management products
and new distribution channels,'' said Mike Niedermeyer,
head of Wells Fargo's investment management business. ``The
purchase will provide significant benefits for both
companies and their clients.''
The agreement calls for the key investment teams of Strong
Financial to join Wells Capital Management, a Wells Fargo
subsidiary, but it was unclear if that meant all 1,125 of
Strong Financial's employees would keep their jobs.
Wells Fargo, which also provides banking, insurance,
investments, mortgage and consumer finance services and has
$397 billion in total assets, has 143,000 employees.
``We're excited about joining a highly respected partner
who understands and shares our commitment to an autonomous
investment culture,'' said Richard Weiss, Strong's director
and head of its investment department.
In morning trading Wednesday, Wells Fargo shares fell 15
cents to $58.60 on the New York Stock Exchange.
Richard Strong is the highest level executive so far to
admit his role in what has become an industrywide scandal
for the mutual fund business. The company he founded, which
was fined $115 million for allowing the improper trades,
put itself up for sale shortly after regulators went public
last year with allegations against Richard Strong.
The acquisition is expected to be completed by the first
quarter of next year. It is subject to approval by the
Strong Funds Board of Directors, its fund shareholders,
shareholders of Strong Financial Corp. and Wells Fargo
Funds Board of Trustees.
http://www.nytimes.com/aponline/business/AP-Wells-Fargo-Strong.html?ex=1086…
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