Egg, the internet bank majority owned by Prudential, is pulling out of France to try to entice buyers for the remainder of the business, which has been up for sale since January.
Shutting down the French operation will cost Egg £113-million, taking the total amount of money invested in the ill-fated French venture to £280-million.
Egg was ordered to close the French business by Prudential, which has been unable to find a buyer who was prepared to take on the French business, which had expansion plans.
Egg said: ”Prudential has … advised Egg that the [sales] process has progressed to a stage at which it has become clear that no potential purchaser has the appetite for the investment required to deliver the French business plan.”
Prudential insisted on Tuesday that it ”remains in discussions regarding a possible transaction” even though it is believed that the sales process has stalled.
The insurer announced on January 14 that it was in discussions about selling its 79% stake in Egg and two weeks later said it had received ”unsolicited indications of interest” from other potential bidders in the Egg business.
Six months on, a deal is yet to be sealed despite speculation that bids have been received from companies such as Royal Bank of Scotland, Capital One and MBNA.
Prudential refused to be drawn on how much longer it expects the sales process to take and how many bidders remain interested in Egg, which was floated at 160 pence in June 2000.
Egg’s shares slipped 0,25 pence to 150,75 pence on Tuesday while Pru’s shares rose 2,5 pence to 451,5 pence. The protracted sales process has led Egg to set its annual general meeting for July 26, the latest date possible to comply with regulations.
The annual meeting for 2003 is, unusually, taking place after Egg’s interim results for 2004, which are scheduled to be released on July 22.
The French business is expected to take 18 months to close and will mean 450 job losses. Egg, which is in talks with the French works council, insisted the cuts will be handled as ”sensitively, respectfully and efficiently” as possible.
The 113 000 customers of Egg France will be helped to transfer their business elsewhere, Egg said.
Prudential denied the sales process is taking an unusually long time. A spokesperson said Pru has been forced to conduct the sales process in public because the movement in Egg’s share price in January forced it to make an announcement. — Guardian Unlimited Â