Prudential Plc 2378; PUK

[millionairemind]

Prudential's hopes for Asia wrecked
Plans to become biggest insurer in region are dashed as failed attempt to buy AIA turns group into a bid target itself.
By Louise Armitstead, Senior Business Correspondent
Published: 10:52PM BST 01 Jun 2010

Prudential's plans to become Asia's biggest insurer are in tatters after talks to cut the agreed $35.5bn (£24.2bn) price-tag of
AIA collapsed amid speculation that its owner, AIG, was instead pursuing a deal with sovereign wealth funds.

The sudden implosion of the deal early on Tuesday has converted the British insurer into a bid target itself and left its chief executive Tidjane Thiam vulnerable.

Investors who have been highly critical of the deal said the positions of all the management, including chairman Harvey McGrath, now had to be reviewed.

Robin Geffen, of Neptune Investment Management, said: "From the beginning it has been an absurdly ambitious attempt by the Pru to buy a large Asian company, at a very high price, with a very unclear strategy."

State-controlled AIG said that "after careful consideration" it had decided to "adhere to the original terms" of the deal rather than a revised $30.4bn cash and shares offer that the Pru had worked on throughout the weekend. The Pru responded by saying that it was "considering its options", adding that a further announcement would be made "when appropriate".

Sources told The Daily Telegraph that AIG was exploring talks with sovereign wealth funds including GIC, Temasek and Qatar Holdings which could become cornerstone investors in AIA ahead of reviving plans for an initial public offering in Hong Kong.

A deal would be an added blow to the Pru since some of the funds agreed to underwrite Prudential's record $21bn rights issue. Qatar Holding, the prime vehicle for strategic and direct investments by the State of Qatar, and GIC, which is controlled by the Government of Singapore and owns a 0.5pc stake, are named in the prospectus as underwriters.

One source said: "The sovereign investors know the asset well and have become more keen on the back of the publicity surrounding the deal. They want to play a part in a deal one way or another." A well-placed source said: "Only half the AIG board wanted the deal with the Pru – the other half wanted to sell a cornerstone stake to sovereign wealth funds ahead of an IPO."

Mr Thiam, who has staked his reputation on the controversial deal, spent all day on Tuesday in crisis talks with investors in a bid to rescue the bid. However, last night the Pru was attempting to extricate itself from a deal. The company has a contract with AIG that compels it to demonstrate that it has made its "best endeavours" to complete the purchase.

The Pru's shares rose by over 6pc on the day to 575p on the expectation that the deal would collapse.The pound also rose in anticipation that the Pru would no longer be buying the dollars it needed to fund the deal and instead unwind its vast currency hedges.

Analysts said the Pru was now an obvious takeover target as a whole or in parts. Lance Burbidge of Redburn Partners said the collapse of the deal was "disappointing strategically". "Management and shareholders must decide whether to remain active and push for a break-up of the group or to leave the business to run as it does today."

[winston]

Hmmm... dont understand.

So the price was fair a few months ago but not fair now ? Was there any Margin of Safety in the first place ?

Sin$918m in fees and break-up cost ? How many more policies do they have to sell, to break-even for this little adventure ?

Somebody did made a lot of money along the way though ...

====================================

Prudential CEO faces the music 11:25 AM

LONDON - PRUDENTIAL chief executive Tidjane Thiam will face the British insurance giant's shareholders on Monday amid calls for his resignation over a failed takeover of AIG's Asian unit AIA.

The annual general meeting was supposed to confirm the US$35.5 billion (S$50.1 billion) takeover of AIA, but the hugely ambitious deal collapsed last week after AIG refused to accept a lower offer.

Prudential was left with a 450 million pound (S$918.5 million) bill, including a break fee of 152 million pounds, and a number of shareholders are calling for Mr Thiam's head.

[winston]

I was trying to undertand how come the fees are so high..

So far, I have found only the following:-

Advisory, underwriting and other fees related to the planned transaction would add another £297.4m.

[kennynah]

conspiracy theory here...

the mobsters are involved... just like May6 flash crash could have been forced by the american mobsters...

but seriously, it's a fact that in the past mobsters would coerce wall street brokers to peddle stocks, which they already own to retailers..and later pump and dump them away for millions of profits...

[winston]

Some more info:-

1) The bill of 450m British Pound of fees is close to the £481million the Prudential paid out in dividends to investors last year. So does that mean investors will not have any dividends this year ?

2) Thiam studied engineering in France before joining the management consultants McKinsey & Company in 1986; from 1994 to 1999 he worked in Côte d'Ivoire first as a senior civil servant and later as the Minister of Planning and Development.

Following the Ivorian coup of 1999, he rejoined McKinsey in Paris, then worked as a senior executive for Aviva before being recruited by Prudential.

3) As a result of the takeover, he is expected to earn up to £5.2 million in 2010. This includes shares worth a potential £2.7 million under a rolling three year incentive scheme, on top of a £900,000 salary and annual bonus of up to £1.6 million.[6]


http://en.wikipedia.org/wiki/Tidjane_Thiam

[winston]

Darryl Guppy mentioned that Pru will drop to around 550p, the previous support.

[kennynah]

Darryl Guppy mentioned that Pru will drop to around 550p, the previous support.

but what do you say W?

[winston]

Ha Ha ... I dont follow this stock that closely and I have no interest in investing in them. This little misadventure cost them a lot of money ...

[winston]

US$450m is a lot of money ...

Pru shake-up sought

Thursday, June 10, 2010

Some of the largest investors in Prudential (2378) will demand a shake-up of the company's leadership over its handling of a botched US$35.5 billion (HK$276.9 billion) bid to take over AIG's Asian unit, British media reported yesterday.

Fidelity, Legal & General Investment Management and Schroders will hold talks with either Harvey McGrath, the insurer's chairman, or James Ross, senior independent director on the company's board, Sky News said.

The investors, angered by the 450 million (HK$5.12 billion) costs racked up by the failed deal, are set to call for an immediate recruitment process to find a replacement for chief executive Tidjane Thiam.

In a separate report, the Financial Times said members of the National Association of Pension Funds planned to meet Prudential on June 22 to discuss whether boardroom changes would be necessary.

Thiam sought to soothe investor anger at the annual general meeting in London on Monday, apologizing for the misadventure's huge costs and deflecting criticism over what one investor said was a "strategic foul-up of momentous proportions."

The Times newspaper said investors canvassed by the paper thought Thiam and other top executives at the insurer should waive their annual bonuses if they were to avoid further shareholder backlashes.

REUTERS

[winston]

Not vested

Britain's Prudential Q3 group sales up 12 percent

HONG KONG, Nov 10 (Reuters) - Britain's largest insurer Prudential Plc reported a 12 percent rise in third-quarter group sales, beating expectations and helped by a pick-up in demand from emerging markets.

Prudential <2378.HK> reported group-wide sales of 809 million pounds ($1.3 billion) for the July-September quarter based on Annual Premium Equivalent (APE) accounting standards.

This compared with a consensus forecast of 773 million pounds and was better than a restated 689 million pounds recorded a year earlier.

Prudential was forced to end a $35.5 billion bid for rival insurer AIA Group Ltd <1299.HK> earlier this year after shareholders balked at the price tag and AIA's owner, American International Group Inc rejected a lower offer.

AIA made a public listing in Hong Kong last month, which values the company at about $36.9 billion.

Prudential shares traded down 2.5 percent in Hong Kong ahead of the results, against a 1.2 percent fall in the broader market <.HSI>.


Source: Reuters