The Northwestern Mutual/Russell combination is, in the judgment of those involved, a clear success. We write this in response to the cover story in the Aug. 7 Pensions & Investments ("Not all M&As produce a happy ending"). The story lists examples of mergers and acquisitions that ostensibly have not lived up to expectations for the companies involved. We regret that our companies were listed in this article, particularly without any further explanation, quoted opinion or supportive attribution.
Northwestern's acquisition of Russell has not only met our shared expectations, it has exceeded them.
In fact, we honestly believe our deal offers a model that may help others improve their own implementation of the M&A process. Consider these facts:
* Russell's investment business is growing. Assets under management have grown 67% ($25 billion) since the acquisition was announced two years ago. Russell total AUM has increased from $38 billion in August 1998 to $63 billion as of July 31.
* Russell's manager-of-managers investment approach has been integrated into Northwestern Mutual's financial products. With the full support of Northwestern Mutual, Russell continues to pursue its strategic agenda, introduce its own products and launch its own distribution relationships around the world. At the same time, Northwestern representatives have generated more than $1 billion in AUM by offering the Russell investment approach to their clients.
* Our strong fit of culture and reputation has been proven and reinforced continually since the deal closed. Northwestern continues to earn highest possible ratings for financial strength (Moody's, Standard & Poor's, A.M. Best), for competitive standing (Fortune's "most admired company in the world" in its category) and for its sales force (Sales and Marketing Management's top award for national sales force). In January, a year after the deal was closed, Russell ranked 13th (up from 15th a year earlier) on the Fortune list of best companies to work for in America. This summer, Russell introduced a unique equity participation plan, allowing every full- and part-time employee to share in the value created by the growth of the company.
Any successful merger or acquisition is a balance between maintaining sufficient operating independence and capitalizing on shared strengths of the two companies.
We have accomplished this, and encourage your interest and questions on this topic.
In our case, the whole is indeed proving to be better than the sum of its parts, and we wish others in our industry the same good fortune and results we are discovering from our relationship.
president and CEO
Frank Russell Co.
James D. Ericson
chairman and CEO
Northwestern Mutual Life Insurance Co.