Wells Fargo has disclosed that it is selling its Mendota Heights, Minnesota-based Wells Fargo Shareowner Services to UK-based Equiniti Group at a price of $227 million. The shareowner services unit of Wells Fargo offers investment-plans and stock-transfer services to over 1,200 clients located in the U.S. According to Equiniti the deal is likely to close in this year’s fourth quarter or next year’s first quarter.
Equiniti will pay for the unit by acquiring new debt facilities and through a rights issue. Citi and Barclays are expected to handle the rights issue which will be subject to the approval of its shareholders.
In the deal, the financial advisor to the lender was Wells Fargo Securities while the legal counsel was Wachtell, Lipton, Rosen, & Katz. On the part of Equiniti, Citigroup Global Markets and Greenhill & Co International served as the advisors.
The deal has come under the stewardship of Tim Sloan, who was recently appointed as the chief executive officer of Wells Fargo. The San Francisco, California-based lender has been trying to get back on track following the fake accounts scandal which shook the banking sector.
According to Wells Fargo the shareowner services business was too tiny in comparison with the rest of the company’s business. As such the deal will not be expected to change the annual operating results of Wells Fargo materially. Wells Fargo Shareowner Services is, however, the third-biggest business of its kind in the United States.
The deal comes hot on the heels of Wells Fargo disposing of its commercial insurance unit which was sold to USI Insurance Services, a privately-held company. In 2016 Wells Fargo disposed of its crop insurance business at a price of $1.05 billion to a Switzerland-based Zurich Insurance Group.
Across the Atlantic
With the acquisition Equiniti will now be in a position to offer Wells Fargo Shareowner Services’ U.S. clients the technology services it has developed for its U.K. clients who include BT and Tesco. Some of the clients of the share registrar unit of Wells Fargo include Berkshire Hathaway, General Electric and Hewlett-Packard.
“By being in the US we are able to serve the very many companies that issue stock on both sides of the Atlantic,” the chief executive officer of Equiniti, Guy Wakeley, said.
The U.S. is the biggest as well as the most active market in the share registration business. According to Wakeley, the U.S. market is legally and structurally similar to the UK’s.