Pru in talks to sell Egg
MBNA, UK banks are interested
Prudential yesterday said it was in talks to sell Egg, its Anglo-French online banking subsidiary, following a big jump in its share price. The Financial Services Authority is not saying yet if it will launch an insider trading investigation, according to wire reports.
Around 10 per cent of Egg's shares are floated on the stock market. Yesterday saw the shares in the bank jump from 125p to 169p, capitalising the business at £1.39bn. According to analysts contacted by the FT, a successful bidder may have to pay up to £1.6bn for Egg."
The insurance group could book a profit of nearly billion pounds if the sale comes off, giving it the armoury for a big US acquisition at a time when the dollar is weak.
MBNA, the American credit card firm, has expressed interest in buying Egg, as well as several UK banks, according to the FT, which says there is likely to be an auction for the company.
Prudential owns 79 per cent in Egg, the UK's biggest pureplay Internet bank with three million customers, of which 2.5 million are credit card customers only. Egg now claims five per cent of the UK credit card market. The UK sub is now in profit; but overall, Egg is lossmaking, dragged down by poor performance at the firm's French arm. Egg lost £24.9 million for the nine months to September 30, with the UK making a profit of £56.7m.
There have been persistent rumours - denied, of course - that Prudential was trying to sell Egg France. To date Egg has invested €170m in France, but, the FT reports, "French consumers - most of whom use store cards rather than credit cards - responded poorly to its controversial" advertising. ®