Prudential Financial Inc said on Wednesday it expects the sale of its minority stake in Wachovia Securities to produce a $1.5 billion after-tax gain.
Wells Fargo & Co said earlier this week that it would pay about $4.5 billion cash for Prudential's stake in the brokerage joint venture. Wells Fargo inherited its majority stake when it acquired Wachovia last year.
The deal between Prudential, the second-largest U.S. life insurer, and Wells Fargo is expected to close by year-end.
Prudential shares rose 4.7 percent, or $2.31, to $51.46, in early-afternoon trading on the New York Stock Exchange after the company disclosed the expected gain.
In a filing with the U.S. Securities and Exchange Commission, Prudential said it expected a gain on the sale of about $2.3 billion before tax, or $1.5 billion after tax. The gain will be reflected in net income, but not in adjusted operating income, and produce about $3.8 billion in net investable funds.
Under a separate agreement through its asset management business, Prudential said it is entitled to further payments for 10 years after the brokerage joint venture is terminated, unless otherwise agreed.
Prudential also holds a $417 million promissory note from Wachovia Securities, payable with interest within 30 days of the termination of the joint venture, the company said.
(Reporting by Lilla Zuill; editing by Gunna Dickson and John Wallace)