Prudential-Wachovia deal could be near
CHERYL WINOKUR MUNK
Associated Press
NEW YORK - A deal between Prudential Financial Inc.'s securities unit and Wachovia Corp. could happen as early as next week, according to a person familiar with the matter.
Last year, the companies began discussing a merger of their securities-brokerage operations that would bring them close to the ranks of industry leader Merrill Lynch & Co.
Those talks, however, cooled, after Wachovia reportedly sought to control the venture's direction.
Since that time, talks have heated up again. Though exact terms are unclear, Wachovia has said previously that management control is critical to any deal it does.
"We've been pretty open about saying there are certain businesses we'd be interested in acquiring over time. One of them is retail brokerage," said Robert Kelly, Wachovia's chief financial officer, at a financial services conference last week.
"The key ... is that we have management control, we control our destiny in terms of integration, it's our brand (that prevails), and it's absolutely critical that the economics are very, very attractive," Kelly added.
A spokesman for Prudential, based in Newark, N.J., declined to comment, as did a spokeswoman for Charlotte, N.C.-based Wachovia.
Together, Wachovia and Prudential would have about 13,200 brokers, behind Merrill's 14,000, but above Morgan Stanley's roughly 12,500.
During its November 2001 IPO roadshow, Prudential stated that it would give its securities business 18 months to prove itself. If, after that, its goals for the unit appeared unreachable, Prudential said it would then consider selling its brokerage and research group.
"Despite significant cost savings, we estimate Pru Securities will lose $33 million pretax in 2002. And, since Pru Securities generates a relatively small portion of the company's individual life, annuity and mutual funds sales, there is little dependence on it for sales," said Bear Stearns analyst Andrew Kligerman in a research note last month. |
