Sources close to Wachovia/First Union suggest that the deal is close to completion, following an internal announcement last week. The final structure of the deal could have implications for plan sponsors, since Prudential’s defined contribution business reports into the securities arm at the firm.
Reports of the proposed combination emerged last fall, but fell apart in late October over disagreements in who would have control of the venture. However, last weekend a report on Bloomberg News noted that Prudential had agreed to a non-cash transaction for Pru’s securities business, with the firm retaining a minority stake in the venture.
Bear Stearns & Co. analyst Andrew S. Kligerman said in a research note Friday that Prudential Securities could fetch a price of $1.5 billion to $5 billion, based on client assets under management of $209 billion, according to Dow Jones. The merged company would have about 13,600 brokers – nearly as many as Merrill Lynch’s 14,600.
Over a year ago Prudential Chief Executive Arthur Ryan said he would give its securities business 18 months to prove itself with a target (return on equity) of 10% to 12% – and if unsuccessful, would consider selling the unit. The securities unit reportedly is still losing money, according to the Bear Stearns report.
In November, blaming rising health care costs and corporate officials more focused on a traditional benefits package, Prudential Financial announced a decision to shut down its WorkingSolutions voluntary benefits platform (see Pru Shuts Down WorkingSolutions Voluntary Benefits ).