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OFFON

PRUDENTIAL FINANCIAL, INC.

(PRU)
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Empower Retirement, LLC entered into a a definitive agreement to acquire full service retirement business from Prudential Financial, Inc. for a total transaction value of approximately $3.6 billion.

07/21/2021 EDT

Empower Retirement, LLC entered into a definitive agreement to acquire full service retirement business from Prudential Financial, Inc. (NYSE:PRU) for a total transaction value of approximately $3.6 billion on July 20, 2021. Prudential Financial agreed to sell all of the equity interests in (i) Prudential Retirement Insurance and Annuity Company (“PRIAC”), (ii) Global Portfolio Strategies, Inc., a registered investment advisor, (iii) Prudential Bank & Trust, FSB, and (iv) Mullin TBG Insurance Agency Services, LLC, (b) the ceding to the Buyer and certain of Buyer’s affiliates of certain insurance policies partially comprising the Business, which will be administered by such parties on behalf of The Prudential Insurance Company of America (“PICA”), and (c) the sale, transfer and/or novation by Prudential Investment Management Services LLC of certain in-scope contracts and brokerage accounts. Business written by The Prudential Insurance Company of America will be reinsured by Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York (for New York business). At closing, Empower will acquire Prudential’s defined contribution, defined benefit, non- qualified and rollover IRA business in addition to its stable value and separate account investment products and platforms. Following the close of the transaction, Prudential’s Retirement business will consist of Pension Risk Transfer, International Reinsurance, Structured Settlements, and Institutional Stable Value wrap product lines. The business will be supported by $2.1 billion of capital through a combination of the balance sheet of the transferred business and Empower capital and surplus. The transaction will be financed from $1.4 billion using existing capital resources and a combination of hybrid instruments, additional short-term debt of $1 billion and approximately $1.15 billion of limited recourse capital notes(LRCN). The valuation is attractive, especially given the strategic alignment and long-term growth potential, representing a P/E multiple of 8.1x on an illustrative levered basis. Transaction is subject to the receipt of regulatory approvals, waiting period applicable under the HSR Act shall have expired or been terminated and the satisfaction of customary closing conditions. The transaction is expected to close by the first quarter of 2022. Prudential Financial plans to use the proceeds for general corporate purposes. The transaction is expected to be immediately EPS accretive and deliver 8% to 9% accretion on a run rate basis by the end of 2023. Prudential now expects to return $11.0 billion to shareholders through 2023, up from the $10.5 billion announced in May 2021, and intends to reduce financial leverage and enhance its financial flexibility. Prudential is expected to contribute $325 million of after-tax earnings to Empower on a fully synergized run rate basis by the end of 2023. Bert Adams, Matthew L. Hazlett, Sean Diamond, Kevin Finnegan, John Benson, Jeffrey P. Bialos, Christopher J. Chan, Brenna Clark, Adam Cohen, Eric Fenichel, Hill Jeffries, Michael Koffler, Carol McClarnon, Daren Moreira, Holly H. Smith, Ronald Coenen, Issa J. Hanna, James R. McGibbon, Michael Miles, Mark Smith and Brian G. Barrett of Eversheds Sutherland (US) LLP served as legal counsels and Goldman Sachs & Co. LLC and Rockefeller Capital Management served as financial advisors to Empower. Thomas Kelly, Alexander Cochran, John Vasily, Robert Fettman, Andrew Jamieson, Clare Swirski, Ramya Tiller, Greg Lyons, Jeffrey Robins, David Sewell, Marc Ponchione, Daniel Sinrod, Lawrence Cagney, Franklin Mitchell, Daniel Priest, Peter Schuur, Jeff Cunard, Judith Church and Nicole Mesard of Debevoise & Plimpton served as legal counsels and Lazard Frères & Co. LLC served as exclusive financial advisor to Prudential.


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Financials (USD)
Sales 2021 55 223 M - -
Net income 2021 6 437 M - -
Net Debt 2021 12 054 M - -
P/E ratio 2021 5,70x
Yield 2021 4,66%
Capitalization 37 868 M 37 868 M -
EV / Sales 2021 0,90x
EV / Sales 2022 0,89x
Nbr of Employees 41 671
Free-Float 57,9%
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Mean consensus HOLD
Number of Analysts 13
Last Close Price 98,89 $
Average target price 106,92 $
Spread / Average Target 8,12%
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Managers and Directors
Charlie F. Lowrey Chairman, President & Chief Executive Officer
Kenneth Yutaka Tanji Chief Financial Officer & Executive Vice President
Stacey Goodman Chief Information Officer & Executive VP
Timothy L. Schmidt Chief Investment Officer & Senior Vice President
Karl J. Krapek Independent Director
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