NEW YORK, Feb 1 (AFP) - American Express Co. on Tuesday said it would spin off its Financial Advisors unit as the company focuses on its credit-card and travel businesses.
The company said it would spin off the unit, which generated seven billion dollars in revenue last year, in a move to "create two distinct businesses and allow them to capitalize on their respective growth opportunities."
The 100 percent spinoff is expected in the third quarter. Kenneth Chenault, chairman and chief executive officer, said the company would continue running the American Express credit-card arm and related services as well as its travel check operations.
These units rang up 22 billion dollars in sales last year.
American Express Financial Advisors features a network of 12,000 advisors serving more than 2.5 million clients, as well as 410 billion dollars in assets and more than 145 billion of life insurance in force. The unit recently acquired British-based Threadneedle Asset Management.
American Express said the two companies will be independent and have separate public ownership, boards of directors and management, but they will maintain "exclusive marketing affiliations." Financial Advisors will continue to use the American Express name for an undetermined transition period following completion of the spinoff.
Both companies will also continue an exclusive marketing affiliation "for a transitional period" that entails certain co-branded programs, including working arrangements with partners such as Delta Air Lines and Costco Wholesale as well as Financial Advisors' Gold and Platinum Financial Services offerings.
Shares of the Dow component rose 2.45 or 4.6 percent to 55.80 in morning trade.
02/01/2005 15:35 GMT - AFP