Acquisition of 401(k) Company to bolster Schwab's mega pension-plan efforts. Last month Charles Schwab agreed to pay $115 million in cash to acquire the 401(k) Company from Nationwide Financial Services. Schwab plans to fold the mega-plan vendor into its Investor Services Enterprise which includes Schwab's Corporate & Retirement Services division.

The transaction is expected to be completed by the end of March 2007.

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"Many Americans are depending on their 401(k) accounts to help them achieve a comfortable retirement -- it's one of the pillars of our retirement security system," says Charles Schwab, chairman and CEO of San Francisco-based Schwab. "The 401(k) Company has dedicated itself to providing retirement-plan sponsors and employees with absolute quality and low-cost products and services, driven by a strong sense of entrepreneurial spirit and integrity."

More to the point, Schwab sees the Austin, Texas-based 401(k) Company as a complement to its retirement-business strategy in that it increases Schwab's ability to provide retirement plans of all sizes. "[Although] Schwab has enjoyed strong growth in the small, mid and large retirement-plan segments, the 401(k) Company has been very successful winning against traditional providers in the mega plan segment," according to a Schwab press release. "During the past two years, the 401(k) Company's newly acquired plans have averaged more than $500 million in assets and more than 8,000 participants."

The 401(k) Company's CEO Jerry Bramlett says business owners are becoming more active in helping their employees meet their retirement goals -- a plus for his company -- and that Schwab's strong brand "adds tremendous strength to our message and our ability to help with those goals."

Meanwhile Columbus, Ohio-based Nationwide sees selling the $01(k) Company as a way to re-focus on its "core' insurance businesses. "By sharpening our focus, not only will we better serve this market, but we also will be able to more effectively deploy capital through reinvestment in core businesses," says Nationwide's president and COO Mark Thresher.

The 401(k) Company administers $21.7 billion in contribution plans for more than 100 companies and 400,000 participants across the U.S. -FWR

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