Citigroup Picks Up One Rotten Eggposted by MR WAVETHEORY at 1/30/2007 02:49:00 AM
In a move that one investor said made Prudential “look a bit stupid”, yesterday’s price was far below the £973 million at which the insurer valued Egg when it bought out a 21 per cent minority stake just over a year ago.
Pru bought the bank for 973 million pounds and unloaded it for half the price.
Citigroup, the US banking giant, made its first acquisition of a UK consumer bank when it agreed to pay £575 million for Egg.
The Egg story is the classic dot com story. Egg's annual report from 2000 tells a story of hyper growth. They acquired half a million customers in 2000. Note how they brag about impending profitability. Don't think that ever happened.
Egg acquired 559,000 net new customers in 2000, leading to a year-end total of 1.35 million customers. This gives Egg a critical mass of customers to build on as the business moves into profitability. The majority of new customers acquired were into the credit card proposition, which now has 745,000 customers. The credit card has proved to be a compelling product. With the addition in the final quarter of both the online and telephone versions of the Boots powered by Egg card, Egg now has three credit card propositions to offer the market, each tailored to appeal to different segments. In 2001 Egg will seek to reinforce the differentiating features still further.