KB Financial Group held a board of directors’ meeting on April 10 and signed a stock trading contract (SPA) with U.S. Prudential Financial in order to acquire Prudential Life Insurance.
Prudential Financial has been seeking to sell its 100 percent stake in Prudential Life Insurance through Goldman Sachs, the lead manager for the sale.
The acquisition method was decided by the "Locked Box" method, which does not allow adjustment of the sale price except in the case of a value outflow after a certain date.
As of the end of last year, Prudential Life Insurance's basic sales amount was set at 2.2 trillion won (about $1.8 billion). On top of that, 75 billion won ($61.4 million) in interest will be added for the company's value increase, which will be until the end of the deal, and the amount of outside outflow will be reduced during this period, confirming the final selling price.
KB Financial Group predicted that such financing would allow the group to maintain a stable BIS ratio even after the acquisition of Prudential Life Insurance. At the end of last year, KB Financial's BIS ratio stood at 14.5 percent.
In response, Shinhan Financial is also tightening its reins. Although Shinhan Financial's performance last year reflected only 59.15 percent of Orange Life's net profit of 271.5 billion won ($222.5 million), its net profit is expected to add nearly 100 billion won ($81.9 million) as it will be incorporated as a 100% subsidiary as of Jan. 1 this year.
KB Financial plans to form a working-level consultative council in the future to come up with measures to stabilize its organization and enhance synergy after the takeover.
KB Financial Group said it will refrain from artificial restructuring of Prudential Life Insurance and respect its employees and financial planners' capabilities and develop together.
