Prudential (LON:PRU) is planning to merge its two big UK businesses into a single entity, the blue-chip insurer has said. The announcement came as the company updated investors on its half-year performance delivering a five-percent rise in operating profits.
Investors have reacted negatively to the news, with Prudential’s share price having lost 1.55 percent to 1,813.00p as of 10:07 BST, slightly underperforming the broader London market, with the benchmark FTSE 100 index currently standing 1.11 percent lower at 7,414.83 points. The group’s shares have added more than 28 percent to their value over the past year, and are up by some 12 percent in the year-to-date.
The Pru announced today that it was set to combine its M&G and Prudential UK & Europe businesses into one savings and investments provider. The combined business manages £332 billion of assets, for over six million customers.
“In recent years, we have seen a convergence in the investments and savings markets with customers across all geographies and demographics demanding more comprehensive solutions to their financial needs,” the group’s chief executive Mike Wells commented in the statement, adding that bringing together the operations “will enable M&G Prudential to increase its growth prospects”.
The Financial Times noted in its coverage of the news that the move to combine the operations was set to increase speculation that the business is being prepared for a sale or a spin-off. While there has long been talk about whether the Pru will break itself up, there have always been question marks over how a separation could be achieved, and how the UK business could be split from the other parts of the group.
The FTSE 100 company separately updated investors on its half-year performance revealing that its IFRS operating profit had climbed five percent to £2.36 billion in the first half of the year. The Pru further hiked its interim dividend by 12 percent to 14.50p per share.