NU Online News Service, May 22, 12:05 p.m. – Nationwide Mutual Insurance Company, Columbus, Ohio, is helping Nationwide Financial Services Inc. generate a big asset gain by changing the structure it uses to control the Gartmore Group.
Nationwide Mutual says it will be trading 8 million shares of its Nationwide Financial Services Inc. stock for Nationwide Financial’s interest in Gartmore Global Investments Inc.
The deal will have a value of about $375 million, and Nationwide Financial will report a gain of $225 million, Nationwide Financial estimates.
Nationwide Financial says it will include the gain in the shareholder equity section of its financial statements.
The Gartmore Group and its sister company, Gartmore Global, are investment companies that manage a total of $77 billion in assets.
The same executive, Paul Hondros, manages both the Gartmore Group and Gartmore Global, but Nationwide Mutual is the direct owner of the Gartmore Group, which operates outside the United States. Nationwide Financial is the direct owner of Gartmore Global, which operates inside the United States.
Nationwide Mutual has had indirect control over Gartmore Global, because it owns 81% of Nationwide Financial’s outstanding common stock.
After Nationwide Mutual takes direct control of Gartmore Global, Hondros will continue to run the combined Gartmore organization, but Gartmore should be more competitive, Nationwide Mutual says.
Nationwide Financial says the deal will also reflect a change in its strategy. In the future, Nationwide Financial will focus on distributing mutual funds, rather than manufacturing mutual funds, the company says.
“A special committee of independent directors of the Nationwide Financial board reviewed and recommended approval of the transaction by the full board of directors,” Nationwide Financial says.
The Nationwide Financial board members who served on the committee are James Brocksmith Jr., Gerald Prothro and Donald McWhorter.
Nationwide Mutual hopes to complete the deal by June 30.
Completing the deal and another, unrelated deal will reduce Nationwide Mutual’s ownership interest in Nationwide Financial to about 66%, Nationwide Financial says.