Prudential exercised a put option on Wachovia Securities in late 2009, that forced Wells Fargo the new parent of Wachovia to pay Prudential 4.5 billion for its minority stake.
Prudential Chairman and CEO John R. Strangfeld announced that Prudential would be looking to spend this money in 2010. Today, Prudential announced that it has paid $4.2 billion in cash for two Japanese life insurance units owned by AIG.
The purchase includes AIG Star Life Insurance Co. and AIG Edison Life Insurance Co. AIG will take a 3rd quarter charge of 1.2 billion related to the sale, meaning Prudential may realize a 1.2 billion dollar gain. Andyraw Kibbens the CEO of The Markets Are Open pointed out that its likely the fair value of the sale by AIG is above the price Prudential paid meaning Prudential will record a gain in the next quarter.
The acquisition allows Prudential to expand and leverage its financial strength and use the financial crisis as a way to grow its business.
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