Standard & Poor’s Ratings Services said that its ratings and outlook on U.K.-based insurance holding company Prudential PLC (A+/Stable/A-1) and related operating entities are unaffected by the announced sale of U.K.-based Internet bank Egg Banking PLC (not rated) to U.S. financial services group Citigroup Inc. (AA-/Watch Pos/A-1+).
S&P said it “views Egg as a noncore operation of the Prudential group, and its sale will not materially affect the strategic direction of the group. Under the terms of the agreement, the consideration payable to Prudential by Citigroup is £575 million [$1.131 billion] in cash, subject to adjustment to reflect any change in net asset value between Dec. 31, 2006, and completion.
“Proceeds will be used to reduce Prudential’s net debt. Standard & Poor’s does not expect the group’s capital adequacy to be adversely affected by the sale. In addition, following the transaction, the group’s surplus under the Financial Conglomerates Directive is expected to improve.”
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