NEW YORK — American Express Co. plans to spin-off to shareholders its American Express Financial Advisors unit.
American Express Financial Advisors, or AEFA, provides financial planning and advice services, asset management, insurance, annuities and related businesses.
In a press release Tuesday, American Express said shareholders would receive all of the common shares of American Express Financial Corp., through which the financial advisors business is conducted.
The transaction is intended to be tax free to shareholders and expected to be completed in the third quarter, subject to certain conditions.
Following the spin-off, American Express plans to raise its return-on-equity target to 28% to 30% from 18% to 20% and maintain its current dividend.
American Express said it intends to provide additional capital to AEFA to provide appropriate liquidity and a senior debt rating to allow the unit to have efficient access to the capital markets.
American Express said it could incur significant spin-off expenses associated with establishing the independent company. The expenses will be recorded in each quarter as incurred.
The two companies will be independent, have separate public ownership, boards and management. The companies will also enter into marketing affiliations to allow AEFA to continue to use the American Express name for a transition period.
Shares of American Express were trading at $54.30 early Tuesday morning, according to INET. Shares closed trading yesterday up 55 cents, or 1%, at $53.35.
