Empower Retirement to acquire Prudential’s retirement business

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Colorado-based Empower Retirement will acquire Prudential Financial Inc.’s full-service retirement business per a definitive agreement between the companies announced July 21.

Prudential’s full-service retirement recordkeeping business comprises more than 4,300 workplace savings plans, through which approximately 4 million plan participants have saved $314 billion in assets as of March 31, according to Prudential. It also has 1,800-plus employees who provide retirement recordkeeping and administration services to financial professionals, plan sponsors and participants.

“Empower and Prudential share a commitment to serving the financial needs of working Americans, their advisors and employers. This transaction will create an even stronger service organization at Empower, fueled by technology and the expertise of our deep talent pool,” said Empower President and Chief Executive Officer Ed Murphy in a prepared statement. “We will continue to leverage our scale and resources to challenge the status quo and be uniquely positioned to serve the retirement and wealth management needs of millions of retirement savers in every phase of their financial journey.”

Prudential Chairman and CEO Charles Lowrey called the deal a “significant milestone in Prudential’s transformation and the execution of our strategy to become a higher growth, less market sensitive, more nimble business.”

Empower will acquire Newark-based Prudential’s defined contribution, defined benefit, non-qualified and rollover IRA business in addition to its stable value and separate account investment products and platforms.

According to a release, Empower expects the acquisition to benefit retirement plan participants by combining two client-focused businesses with deep retirement expertise on a single technology platform.

Prudential will continue to participate in the institutional and individual retirement market, serving retirees, annuitants and employers through its Institutional Investment Products business, through income and investments solutions provided by its Individual Annuities business, and through its global asset management firm PGIM.

Prudential will use proceeds from the transaction for general corporate purposes and expects to return $11 billion to shareholders through 2023, up from the $10.5 billion announced in May.

The transaction is expected to close in the first quarter of 2022 pending customary regulatory approvals.

Eversheds Sutherland served as legal counsel and Goldman Sachs & Co. LLC and Rockefeller Capital Management served as financial advisors to Empower. Debevoise & Plimpton served as legal counsel and Lazard served as exclusive financial advisor to Prudential.