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Prudential share price rallies as group unveils plans to split

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Shares in Prudential (LON:PRU) have advanced in London this morning as the company unveiled plans to demerge its M&G Prudential business. The blue-chip group further updated investors on its full-year performance, posting a rise in operating profit, and announced the partial sale of its UK annuity portfolio.

As of 09:31 GMT, Prudential’s share price had added 5.01 percent to 1,917.00p, outperforming the blue-chip FTSE 100 index which currently stands 0.29 percent higher at 7,159.47 points. The group’s shares have added just under 12 percent to their value over the past year, as compared with an over two-percent drop in the Footsie.

The Pru unveils demerger plans

The Pru announced this morning that it had decided to demerge M&G Prudential from Prudential into two separately-listed companies. On completion of the demerger, shareholders will hold interests in both companies.

“The decision to demerge M&G Prudential follows a rigorous review by the Board which […] concluded that it is in the best interest of the group to operate as two separately-listed companies, able to focus on their distinct strategic priorities in their chosen geographies,” the Pru’s chairman Paul Manduca commented in the statement, adding that both companies were “expected to meet the criteria for inclusion in the FTSE 100 index”.

The Pru further announced that it was selling £12 billion of its UK annuity portfolio to Rothesay Life.  

City A.M. quoted Nicholas Hyett, equity analyst at Hargreaves Lansdown, as commenting that the split “allows investors to get a firmer handle on what’s going on at each of the component businesses and should help M&G focus on its own progress rather than having to compete with the rapidly growing Asian business for management attention”.

Group posts rise in FY profit

The Pru separately updated investors on its full-year performance, revealing that its IFRS operating profit had climbed six percent to £4.7 billion. The company’s Asia business saw double-digit broad-based growth in new business profit, up 12 percent and IFRS operating profit rising 15 percent.

As of 09:58 GMT, Wednesday, 14 March, Prudential plc share price is 1,908.00p.

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