Prudential to spin off United Kingdom and European business

Galtero Lara
Marcha 14, 2018

Prudential plc announces its intention to demerge its UK & Europe business ('M&G Prudential') from Prudential plc, resulting in two separately-listed companies with different investment characteristics and opportunities.

The move will create two separately-listed companies, with the remaining Prudential business comprising its Asian, US and African operations and headed by the group's chief executive Mike Wells.

M&G Prudential is one of the leading retirement and savings businesses in the United Kingdom and Europe, offering compelling product propositions through its range of investment solutions provided by M&G and PruFund.

M&G Prudential will be led by its current chief executive John Foley and will continue its drive to become a more capital-efficient and customer-focused business, targeting growing demand for comprehensive financial solutions. M&G Prudential remains on track to deliver its previously announced cost savings target. As part of the restructure, Prudential will sell its £12 billion book of United Kingdom annuities to Rothesay Life.

The proceeds from this transaction would be used to support the demerger process, it added.

Prudential has announced plans to split its business in two, with one focused on the United Kingdom and Europe and the other on global markets including Asia, where it hopes to sell its products to the growing numbers of wealthy consumers.

"'Our strategy is aligned to structural trends: the savings and protection needs of the fast-growing middle class in Asia, the retirement income needs of the baby boomers in the U.S. and the increasing demand for managed savings solutions among the ageing populations of the United Kingdom and Europe", Wells explained. Jackson is one of the largest providers of retirement solutions in the United States, delivering income security to increasing numbers of baby boomer retirees.

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The two new groups will both be based in London, where they will have separate listings on the stock market. M&G Prudential will be headquartered in the United Kingdom and hold a premium listing on the London Stock Exchange. "Both are expected to meet the criteria for inclusion in the FTSE 100 index".

Prudential will remain headquartered in London, under current chief executive Mike Wells. Looking forward, we believe we will be better able to focus on meeting our customers' rapidly evolving needs and to deliver long-term value to investors as two separate businesses.

The move is created to help Prudential focus on its lucrative Asian, US and African operations while giving M&G Prudential "more control" over its own business strategy and the way that it allocates capital.

The division of the group will see Prudential focus outside the United Kingdom on the USA and Asian markets.

The decision to separate M&G Prudential comes just a year after it was created through the combination of Prudential's life and asset management operations in the United Kingdom and Europe, and follows an in-depth review by the company.

The Group will look to realise efficiencies to benefit the two businesses post demerger. The demerger is subject to shareholder and regulatory approval.

Prudential said the timing of the demerger would depend on several factors, including the completion of the United Kingdom annuity sale, and the prevailing market conditions.

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