13 Jul 2004
Statement regarding Egg France
The Board of Egg announces today that it intends to begin to take the necessary steps to withdraw from the French market.
In October 2003, we announced that our French management team had developed a revised business plan, which we considered to be a strong, value-creating plan, but which required a level of investment greater than Egg was prepared to take on a stand-alone basis. We also announced therefore that we were in negotiations with potential partners that may have led to a joint venture or similar transaction. The search for a strategic partner was then superseded by Prudential announcing in January 2004 that it was considering proposals for its approximately 79% shareholding in Egg. Prudential is announcing separately today that this process is ongoing. Prudential has also advised Egg that the 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, and accordingly, the Board of Egg announces today that it intends to begin to take the necessary steps to close its business in France.
We expect the cost of closing Egg France to be approximately €170 million (£113 million). While it is likely that the business will continue for a significant period of time to effect a smooth closure, a provision for the full estimate of exit costs and asset impairment write-downs will be booked in the consolidated Egg accounts in July 2004 and this provision will be revised in line with actual experience, as our consultations progress.
The French management team, led by Chief Executive of Egg France Marc Luet, will begin consultation with the French Works Council and other necessary regulatory bodies to discuss its plan to withdraw from the French market. These bodies have been kept informed of Egg’s situation over previous months and Egg will continue to work closely and co-operatively with them to ensure that our people in Tours and Paris are treated fairly and helpfully. Particular attention will be given to helping our people secure alternative employment.
We have the commitment and support of the French senior team to ensure this process is effected as sensitively, respectfully and efficiently as possible for our people, our customers and our shareholders. We will be confirming to our customers in France that all our contractual commitments to them will be honoured, and that sufficient time will be given for them to make alternative arrangements. In the meantime, customers can continue to operate their accounts as normal.
Paul Gratton, Egg’s Chief Executive, said:
“Following the slow start we experienced in France, we have been clear that Egg is not prepared to make the level of investment on a stand-alone basis that our revised plan shows the business needs for it to be successful. We have a great team of people who have been very patient and loyal during this period of uncertainty and we will be making every effort to assist in their redeployment.”
- ends -
Notes to Editors:
- Egg will be announcing its interim results for the period to 30 June 2004 on 22nd July 2004 at 07.00h.
- Egg’s AGM will take place on 26th July 2004 at 11.00 a.m.
- Egg plc floated on 12 June 2000 and is listed on the London Stock Exchange. Prudential plc holds approximately 79% of the share capital.
For further information, please contact:
| Emma Byrne
|| 0207 526 2600 / 07775 657 241
|Investors / Analysts:
| Kieran Coleman
|| 0207 526 2648 / 07711 717358