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  • Seller
  • Buyer
  • Type
  • Date Announced
  • Seller AUM
  • Prudential Financial, Inc. (Retail Brokerage & Clearing Divisions)
  • Wachovia Corporation
  • Securities and Investment Banking
  • February 19, 2003
  • N/A

Seller Details

Prudential Financial, with approximately $556 billion in total assets under management and administration as of December 31, 2002, serves individual and institutional customers worldwide, and includes Prudential Insurance Company, one of the largest life insurance companies in the U.S. Prudential Financial offers a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services.

Prudential Securities is one of the premier brokerage firms in America with $272 billion of client assets. The company operates a branch network of nearly 260 offices across the United States and in Latin America.

Buyer Details

Wachovia Corporation, created through the merger of First Union and Wachovia, had client assets of $342 billion, assets under management and administration of $802 billion, and stockholders' equity of $32 billion at December 31, 2002. Wachovia is a leading provider of financial services to individual and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C.

Wachovia Securities is the nation’s fifth-largest brokerage firm, operating a nationwide network of 533 retail offices, a system of 2,900 in-bank financial centers and e-commerce, discount brokerage and fully-disclosed clearing services. Employing 11,000 people, the firm manages approximately $265 billion in client assets in 3.4 million accounts.

Transaction Summary

Under the terms of the agreement, Wachovia and Prudential will combine their retail securities brokerage and clearing operations to form a new firm, which will be headquartered in Richmond, Virginia. Wachovia will have a 62 percent ownership interest in the new firm, and Prudential will own the remaining 38 percent. Wachovia will appoint three members to the firm's board of managers and Prudential will appoint two members. The contributed brokerage operations will continue doing business under their current names until integration is complete, and then will operate as Wachovia Securities.

The new company will be the third largest brokerage firm in the country, based on combined client assets of $537 billion and 2002 estimated combined net revenue of $4.2 billion. The firm will have a national footprint of more than 3,500 brokerage locations, including 791 dedicated retail offices in 48 states and the District of Columbia. The new company will create a full-service firm that will provide advice to customers based on research from multiple providers, and have access to a broad suite of financial products and services from its parent organizations, including mutual funds, annuities, insurance, lending, trust and 401(k) products. It will be one of the leading distributors of mutual funds and annuities in the country.

The combined entity will benefit from significant annual expense efficiencies, estimated at $220 million after tax by 2005. The new company will record merger-related and restructuring charges and exit cost purchase accounting adjustments of approximately $681 million after tax in connection with the transaction over the 18-month integration period.

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