Prudential Financial Adds Retirement Operations From Union Bank

CHICAGO -(Dow Jones)- Prudential Financial Inc.'s (PRU) deal to acquire some retirement fund-related operations of Unionbancal Corp. (UB) unit Union Bank of California NA will boost its West Coast presence in targeted markets.

The Newark, N.J., life insurer said it will pay $103 million to acquire about 600 defined contribution retirement plans with around 175,000 participants, and around 60 defined benefit retirement plans, which together account for about $8 billion in total plan-sponsored assets.

Prudential's retirement unit had $157 billion in retirement account values at the end of September, ranking it 12th in terms of assets under administration in its retirement business.

Prudential will add Union Bank's Highmark mutual funds to its investment offerings for retirement plan sponsors, and Union Bank will offer Prudential retirement plan products to its customers. Prudential plans to hire approximately 40 to 50 of Union Bank's current retirement staff, a Prudential spokesman said.

The companies expect the transaction to close in the fourth quarter and complete the retirement plan acquisition by June 30.

In 2004, Prudential acquired the retirement business of Cigna Corp. (CI) for $2.1 billion. The Union Bank deal is the first in which Prudential is acquiring existing plan sponsorings, said Jamie Kalamarides, senior vice president of Prudential Retirement, in an interview.

"We do recognize this is a consolidating industry," said Kalamarides. He said he could not say whether Prudential was on the lookout for more such deals, but called the acquisition "consistent with our strategy, and at an appropriate price."

Kalamarides said the deal would help boost Prudential's business in its key markets: mid- to large-sized corporate accounts, unions and government entities and not-for-profit hospitals.

Union Bank said it expects to record a gain of $59 million, or 43 cents a share, at the close. It will also record a $7 million, or 5 cents a share, personnel-related divestiture charge in the fourth quarter due to the sale.

Prudential shares gained 2.9% Wednesday to close at $94.38, in line with broader gains for the U.S. stock market.

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By Lavonne Kuykendall, Dow Jones Newswires

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