Prudential Financial and Wachovia have agreed to a joint venture, merging the firms retail brokerages. The combined forces represent $537 billion in client assets and estimated net revenue of $4.2 billion in 2002. The deal is set to close in the third quarter of this year.
The new firm, 62% owned by Wachovia and 38% owned by Prudential, will be based in Richmond, Va. John Strangfeld, vice chairman at Prudential, will serve as chairman for the new company. Each firms equity research teams will remain separate.
"This new company makes sense because it gives us the scale necessary to compete and because both parent companies share an investor-focused strategy," Strangfeld said.
The merger is estimated to save the companies $220 million annually, starting in 2005, through operational efficiencies. In the meantime, the merger will cost $681 million after tax, over an 18-month period.