Prudential's Egg Auction: A Delicate Dance Continues

Prudential, the UK's second largest life assurer, has seen its shares dip 2% to 454p following a conference call by Chief Executive Jonathan Bloomer. Despite stressing that it does not have to sell its 79% stake in Egg, the internet bank, and is not desperate for capital, the market reacted negatively to Bloomer's comments. The auction process, which began in January after Egg's expansion into France went badly wrong, remains ongoing, with some bidders, including credit card group MBNA, still in the running.

Key Takeaways:

• Prudential's shares dipped 2% to 454p after Jonathan Bloomer's comments on the Egg auction.
• Bloomer stated that Prudential does not have to make a sale and is not desperately in need of capital.
• The auction process is ongoing, with some bidders still in the running, including credit card group MBNA.
• Royal Bank of Scotland's exclusivity contract to look at Egg lapsed in January, allowing other bidders to enter the process.
• Egg's Chief Executive Paul Gratton stressed the importance of taking the time to understand the company, which has 3.2 million customers, before making a bid.
• Prudential has received some bids, but the exact nature of these bids is not disclosed.
• If Prudential decides to keep Egg, it has a Plan B in place, but is currently focused on Plan A, the sale of the company.

Statistics:

• Prudential's shares dropped 2% to 454p following Bloomer's comments.
• Egg's first-quarter losses narrowed to £4.9m (compared to £15.7m).
• Egg's bad debt provisions rose, leading to a fall in UK operating profits.
• The auction process for Egg's 78.5% stake in the company began in January.
• Royal Bank of Scotland's exclusivity contract to look at Egg lapsed in January.
• Egg has 3.2 million customers.

Sources:

• "Prudential not forced to sell 79pc stake in Egg, says chief executive" [The Telegraph, January 10, 2004]
• "Prudential sells none of Egg" [The Financial Times, January 22, 2004]