As part of this arrangement, Hewitt will acquire the NTRC business, which currently provides nearly 200 companies and more than 1 million participants with defined benefit, defined contribution and retiree health and welfare administration services, including recordkeeping and customer service. The arrangement also covers retirement consulting and actuarial services, including plan design and communication, according to the firms.
Somewhat ironically perhaps, at least for Enron trackers, the acquisition brings together the firm that performed recordkeeping for Enron (NTRC) and the firm that assumed recordkeeping responsibilities after the now-infamous blackout (Hewitt) (see A Change in Plans: The Enron Conversion ).
NTRC was formed after the Chicago-based master trust giant Northern Trust had acquired Hazelhurst Associates more than a decade ago. At the time the acquisition marked a return by Northern Trust to the participant recordkeeping business it exited in the mid 1980s. In Hazelhurst it also found itself allied with a firm that had been a leader in developing the strategic alliance concept in the early 1990s that allowed trust/custody banks and third-party administration consulting firms to compete head-on with the mutual fund complexes for daily valuation business. Lincolnshire, Illinois-based Hewitt was also at the forefront of the strategic alliance movement, forming alliances with Northern Trust and the former Wachovia Bank in the early 1990s as well.
The new agreement focuses on the “core” areas of expertise of the two firms; HR outsourcing and consulting services from Hewitt, and trustee, custody and pension payroll services from Northern Trust. Hewitt and Northern Trust have also agreed to work together as preferred providers in each firm’s core area of expertise.
Effective with the transition, NTRC clients covered by this arrangement will have access to Hewitt’s suite of outsourcing and consulting services. Hewitt says it will assume responsibility for NTRC’s staff and facilities in Atlanta, Georgia. Last December, Hewitt assumed responsibility for 401(k) administration services for clients of Cleveland-based National City Corporation, picking up responsibility for National City’s 401(k) recordkeeping staff and functions in Kalamazoo, Michigan (see Hewitt Takes Outsourcing to a New Level ).
Hewitt, a publicly traded firm since last June, anticipates the acquisition will be modestly dilutive through the transition period, while Northern Trust says it expects to recognize charges totaling approximately $20 million as a result of the transaction, principally reflecting the write-off of unamortized technology investments. The purchase price and other financial terms of the agreement were not disclosed. The closing of the proposed transaction, expected to close in June, is subject to the execution of a definitive agreement and satisfaction of any conditions contained in it.