Prudential's Japanese Deals To Finalize Soon

Prudential Financial, Inc. (NYSE: PRU) may finally see its Japanese deal come to fruition, according to Citigroup, which reports "reports in The Wall Street Journal suggest PRU may be in the final stages of acquiring AIG's two remaining Japanese life insurance operations, AIG Star Life (Star) and AIG Edison Life (Edison), in a transaction that could be announced before the end of 3Q10. We expect the purchase price for Star & Edison to be in the $4B-$5B range. Of this, we estimate PRU should be able to pay for at least $4B in cash utilizing a combination of: upstream dividend of $2.4B paid by its U.S. operations to the parent holding company in 2Q10; $1B of senior long-term debt issued in 2Q10; and the pending proceeds from the sale of its Korean investment business. Allowing for the typical six-month closing period to get necessary regulatory approvals, PRU should be able to generate sufficient excess capital so that it would not need to raise additional funds to finance the transaction."

Citigroup maintains its Hold rating for Prudential Financial, which closed yesterday at $57.56.

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