In a regulatory filing with the Securities and Exchange Commission, Prudential Financial Inc. (NYSE: PRU) stated on Wednesday that it expects to gain about $1.5 billion from the sales of its minority stake in Wachovia Securities.
The financial services and insurance firm is selling the stake to Wells Fargo & Co. (NYSE: WFC) for approximately $4.5 billion. Wells Fargo is the majority owner of Wachovia Securities, a stake it attained last year when it acquired Wachovia.
The purchase agreement between the two financial companies is for an all-cash deal and gives Wells Fargo complete ownership of the retail brokerage joint venture, which involved Wells Fargo Advisors LLC, Prudential and Wachovia Securities.
“We thank Prudential for being a strong partner as we built the third largest retail brokerage firm in the nation,” said Wells Fargo Chief Financial Officer Howard Atkins in a press release.
Prudential Chairman and CEO John Strangfeld stated in the release: “We are pleased to have reached an all-cash agreement with Wells Fargo for the settlement of our interest in the Wachovia Securities joint venture. The settlement will substantially enhance our capital position and financial flexibility going forward.”
Prudential said it’s after tax gain on the sale will be roughly $1.5 billion, while pre-tax profit is estimated at $2.3 billion. The company said the gain will be seen in net income and provide them with more than $3 billion in additional capital for investment.
Additionally, Prudential holds $417 million worth of promissory notes from Wachovia Securities, which are payable within 30 days of a joint venture termination.
Prudential Financial, Inc. is a financial services leader with approximately $641 billion of assets under management as of September 30, 2009.
