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Prudential to sell Egg to Citigroup

Prudential has entered into a binding agreement to sell its banking business Egg Banking to Citigroup.

Under the terms of the agreement, the consideration payable to Prudential by Citigroup is 575m in cash, subject to adjustment to reflect any change in net asset value between December 31 2006 and completion.

Prudential has also agreed in principle outline terms with Citigroup with respect to a UK distribution agreement through which Prudential will provide life and pensions products to Egg’s customer base for a five year period.

This distribution agreement will preserve the strategic benefits to Prudential of access to Egg’s direct distribution model and its customer base of over 3 million.

Prudential has also been selected as a strategic provider to Citigroup for the distribution of life insurance products to Citigroup’s consumer banking customers in Thailand, Indonesia and the Philippines.

The transaction is subject to regulatory approvals and is expected to complete by the end of April 2007.

The transaction is expected to improve the Group’s surplus under the Financial Conglomerates Directive by an estimated 300m.

Mark Tucker, group chief executive of Prudential, says: “The sale of Egg to Citigroup realises greater value for our shareholders than retaining the business within the Group.

Citigroup is the largest credit card issuer in the world and sees enormous opportunities to develop Egg’s business in the UK.”

For the financial year ending December 31 2006, Egg’s operating losses on continuing ordinary activities before tax are estimated to be 145m.

As at December 31 2006, Egg’s gross assets and shareholders’ funds are estimated to be 9.5bn and 276m respectively.

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