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Wells Fargo, Nikko to Sell Unit to Barclays : Banking: The purchase will make the British firm the biggest institutional fund manager.

June 22, 1995|THOMAS S. MULLIGAN | TIMES STAFF WRITER

Wells Fargo & Co. and Nikko Securities Co. said they agreed to sell their Wells Fargo Nikko Investment Advisors joint venture to Barclays, the British banking giant, for about $440 million.

The sale, announced Wednesday and expected to close in this year's fourth quarter, will net Wells Fargo about $100 million after taxes, the firm said. Wells executives did not say how they plan to use the proceeds.

The purchase of Wells Fargo Nikko will make Barclays the world's largest institutional fund manager, with about $250 billion under management, and the second-largest fund manager overall, behind Fidelity Investments, whose $320 billion under management is split between retail and institutional customers.

Fred Grauer, chairman of Wells Fargo Nikko, said in a news conference that the deal, which is subject to regulatory approval, would create "a global super-firm" with a worldwide clientele.

He said the deal was motivated in part by institutional clients' increasing demand for a money manager with a capital base large enough "to backstop any issues that arise." He referred to derivitives-trading losses that have hurt some firms and led to this spring's collapse of Barings, the venerable British merchant bank.

Lindsay Tomlinson, chief executive of Barclay's BZW Asset Management unit, said that because of the "perfect geographical fit" between Wells Fargo Nikko and his operation, there should be few if any layoffs after the two are combined.

Wells Fargo Nikko is the world's largest manager of stock-index funds for institutional investors, with $171 billion of assets under management as of March 31. Its more than 530 clients include the California State Teachers Retirement System and Exxon Corp.

The joint venture began five years ago when Japan's Nikko Securities Co. paid San Francisco-based Wells Fargo $125 million for a half-interest in its institutional money-management unit, then known as Wells Fargo Investment Advisors.

As part of the deal, Barclays is also is buying Wells Fargo Bank's MasterWorks division, which manages 401(k) retirement plans. Wells Fargo declined to specify the price for MasterWorks or say how much of the $440-million purchase price will go to Wells and how much to Nikko.

In a separate deal with Barclays, Nikko Securities will retain a 50% interest in the joint venture's operations in Japan.

Wells Fargo said the impact to its net income in 1994 from Wells Fargo Nikko and MasterWorks was about $10 million. Wells Fargo had a net income last year of $841 million.

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