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Administration January 2, 2005
American Express to Spin off Financial Advisory Business
February 1, 2005 (PLANSPONSOR.com) - American
Express has announced that it will spin off its financial
advisory business to its shareholders, creating two distinct
companies.
Reported by Kip McDaniel
American Express will focus on its charge and credit card, payments processing and travel businesses, while the new American Express Financial Corp. will deal with financial planning and advice, asset management, insurance, annuities and related businesses, according to the company.
Shareholders will get all of the shares of the new company, according to a Web site statement . The split is expected to be completed by the end of the third quarter of this year.
“This spinoff will create two distinct businesses and allow them to capitalize on their respective growth opportunities,” said Kenneth Chenault, American Express chairman and chief executive officer, in the Web site statement. “Both businesses are generating positive momentum. They have robust competitive advantages and the progress they have made in recent years will be accelerated by allowing them to now pursue independent strategies.”
The two companies will be independent, according to the Web statement, with separate public ownership, boards of directors and management. However, they will enter into an “exclusive marketing affiliation” that will allow the offshoot to use the American Express name during a transition period following the split.
The new business will be led by James Cracchiolo as chairman and chief executive, according to the announcement.