Pru pulls out of great Egg race

Cans plans to sell Internet bank

By Tim Richardson • Get more from this author

Posted in Financial News, 3rd August 2004 09:24 GMT

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The Prudential has canned plans to flog its stake in UK Internet bank Egg claiming that it makes better financial sense to hang on to it.

Today's announcement ends months of speculation that the Pru would cash in on its 79 per cent stake in Egg. A number of companies - including US investment bank, JP Morgan, MBNA, Capital One and the Royal Bank of Scotland - have all been associated with a possible acquisition at some time or other.

Now, this long running saga of "will they, won't they" appears to be over with the Pru says it's "no longer in discussions regarding a possible transaction". Instead, execs at the Pru reckon that "retention of its 79 per cent stake offers better value to its shareholders than the sale of Prudential's interest".

Said Jonathan Bloomer, group chief exec of Prudential: "We had an obligation to explore all the options for the business following the approaches we received. Our objective is to ensure that our shareholders benefit in full from the value inherent in Egg and we have concluded shareholders' interests are best served by retaining our Egg holding.

"Egg has brought significant change to the market, with a track record of delivering innovative products and services to customers. It is a very successful business in the UK with significant potential to grow in value."

The "potential" of Egg means getting the most out of its UK business while following through with plans to close its loss-making French business.

And investors' response to today's news? The price of Egg's shares dropped like a sack of potatoes. In the first few hours of trading Egg shares were down 32p (22 per cent) at 112p. ®