Prudential sells Egg for 575 mln stg cash UPDATE

Prudential sells Egg for 575 mln stg cash UPDATE

	Published : Mon, 29 Jan 2007 12:55 By : Agencies Print this Story

(Adds new business figures)

LONDON (AFX) - UK insurer Prudential PLC said it has agreed to sell Egg, its loss-making online banking business, to US financial services giant Citigroup Inc for 575 mln stg cash.

Under the deal, Prudential will continue to offer its life and pension products to Egg's three mln customers for the next five years.

'The sale of Egg to Citigroup realises greater value for our shareholders than retaining the business within the Group,' Prudential chief executive Mark Tucker said in a statement.

'Citigroup is the largest credit card issuer in the world and sees enormous opportunities to develop Egg's business in the UK.'

Prudential said Egg had an operating pretax loss estimated at 145 mln stg in the year to Dec 31, 2006. The business, which generates the bulk of its income through credit card lending, has been hit by rising levels of personal indebtedness among UK consumers.

The sale marks a reversal of Tucker's decision in Dec, 2005, to take full control of Egg, buying up the 21 pct of the bank that it did not already own, and ending its five-year stint as a publicly quoted company.

Tucker's predecessor, Jonathan Bloomer, had made repeated attempts to sell Egg the previous year, but failed to find a buyer.

Analysts broadly welcomed today's move, although there was some disappointment the sale price fell short of the rumoured 950 mln stg.

'It's half of what the market was thinking. Obviously they wanted to get rid of it as soon as possible,' Collins Stewart analyst Tim Young said.

'I think it's incrementally positive. It seems that the rumours of 950 mln stg were completely wrong,' Peter Eliot at Man Securities said.

Separately, Prudential announced total new business sales for the year to Dec 31, 2006, came in at 2.47 bln stg on an annual premium equivalent basis, a 16 pct rise on the previous year and driven by continued strong growth at its Asian and US divisions.

Sales at the underperforming UK arm rose just 1 pct to 900 mln stg. A consensus opinion of analysts expected total sales of 2.404 bln stg, with UK sales penciled in at 862 mln stg.

By 11.30am, Prudential shares were up 7-1/2 pence at 712.

myles.neligan@afxnews.com; alex.ferguson@afxnews.com

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