First Data Corp.'s deal to buy a mutual fund administration unit of Allmerica Financial has turned into a much bigger transaction than previously disclosed.

As part of a definitive agreement announced on Thursday, Allmerica will not only sell its 440 Financial Group unit to First Data, it will also outsource its retirement services processing to the Hackensack, N.J.-based company.

The retirement services unit administers more than 600 401(k) retirement savings plans. 440 Financial is the mutual fund administrator and distributor for such institutions as Banc One Corp. and Fleet Financial Group.

Pending approval by the Securities and Exchange Commission, the deal will be concluded at the end of this month, said Robert F. Radin, president of First Data's Shareholder Services Group. This unit provides back-office services to mutual funds and will manage the Allmerica units that are being acquired.

Financial terms of the deal were not disclosed. Mr. Radin said the transaction will boost Shareholder Services' estimated annual revenues of $200 million by about 15%.

In November, First Data announced a letter of intent to buy 440 Financial. Company officials have never before disclosed plans to handle the back office of Allmerica's retirement plan servicing unit.

The agreement calls for 300 employees of 440 Financial to transfer to First Data's payrolls, along with 200 employees of Allmerica's retirement services unit.

No job reductions are planned, except among the 12 employees of 440 Financial who administer Banc One Corp.'s mutual funds. Mr. Radin said those jobs are being eliminated because Banc One is taking administration in-house. 440 Financial will continue to handle portfolio accounting and distribution for Banc One's mutual funds.

Larry Renfro, the founder of 440 Financial, will remain with Worcester, Mass.-based Allmerica. But for a transitional period of one year he will help First Data run 440 Financial. First Data plans to ask 440 executive vice president Walter M. Laliberte to stay on. But no agreement has been set. Mr. Radin added that all other key 440 executives are expected to stay with the firm.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.