Wells Fargo (WFC - Get Report) will sell its institutional retirement and trust business to Principal Financial Group (PFG - Get Report) for $1.2 billion. 

Wells Fargo shares were flat, moving down 0.04% to $48.86 apiece in premarket trading Tuesday. 

Principal Financial shares were down 0.18% to $53.22 apiece in premarket action.

The cash deal allows the $14.8 billion market cap Principal Financial to scale aggressively, as the deal will double its retirement business.

"Retirement is at the heart of our business and core to our future," said Dan Houston, chairman, president and CEO of Principal. "This will be a powerful combination for customers, employees and shareholders as we solidify our place as a top-three leader in the U.S. retirement market. The acquisition will bring expanded capabilities, reach and scale."

The sale includes Wells Fargo's retirement plan record keeping and administrative services for 401(k)s and pension plans, as well as its institutional asset advisory business. 

"The Institutional Retirement and Trust business is well-managed, award winning and highly respected in the market," said Jon Weiss, head of Wells Fargo Wealth & Investment Management." Wells Fargo decided to sell the unit in order to focus on other ones. "This sale reflects Wells Fargo's strategy to focus our resources on areas where we can grow and maximize opportunities within wealth, brokerage and asset management," Weiss said. 

This could be a clear positive for Wells Fargo. "We expect WFC to report a sizable gain on the sale of its Institutional Retirement & Trust business when the transaction closes in 3Q19," said RBC Capital Markets analysts in an note out Tuesday morning. Wells could also earn a $150 million earnout  "if revenue retention is better than expected," RBC said.