True to its word,
(SCHW - Get Report)
is expanding further into the 401K business.
The nation's biggest discount brokerage is acquiring The 401(k) Company, a subsidiary of
Nationwide Financial Services
, for $115 million. The deal, announced Friday, is expected to close in the first quarter of 2007.
Observers had been speculating that the firm would use proceeds from the sale of its U.S. Trust subsidiary to purchase another online brokerage such as
. But during an
earlier this month, CEO Chuck Schwab said he would rather make acquisitions in the 401K retirement planning business or use the proceeds to buy back stock.
In November, Schwab announced it was selling U.S. Trust, its asset management business that caters to the super rich, to
Bank of America
. Schwab expects to record a $1.9 billion pretax gain from the sale.
Schwab already does 401K plan administration for small and medium-sized companies but is looking to get into the "mega plan segment," in which The 401(k) Company specializes in.
The 401(k) Company services more than 100 companies and client assets of $21.7 billion.
Shares of Schwab were down 4 cents to $19.08.