Prudential bid to buy AIA may falterWednesday, April 28, 2010
Prudential may fail to purchase American International Assurance for US$35.5 billion (HK$276.9 billion) amid disagreement among shareholders and risks of a breakup of the UK- based insurer into three regional units.
Prudential's biggest shareholder, Capital Group, is seeking partnership with three British insurers to acquire Prudential before the merger with AIA, The Times reported yesterday.
Capital, an US investment fund that has a 12 percent stake of Prudential, has reportedly approached Resolution, Aviva and another party for "a possible" consortium bid.
"To hear that Capital is not supportive of the deal will stir this up a lot more," a top shareholder told Reuters.
"There is merit in the argument that more value might be realised if [Prudential] were broken up. We have encouraged [Prudential] to sell the UK business and focus on the Asian business."
A breakup could be worth about 955 UK pence (HK$11.36) a share, Panmure Gordon analyst Barrie Cornes said in London.
Prudential shares hovered between 547 pence and 563 pence yesterday.
Cornes believes Resolution is keen to buy Prudential's UK unit to build a 10 billion (HK$119 billion) British insurer while Aviva, the second largest UK insurer, may seek to acquire its US unit, Jackson National Life.
About 75 percent of Prudential shareholders must vote for acquiring AIA on May 27 for the deal to proceed. "There is a very good chance they won't get it," a top shareholder said.
Prudential is expected to start trading in Hong Kong on May 11.
MANDY LO AND AGENCIES
http://www.thestandard.com.hk/news_deta ... 00428&fc=4
It's all about "how much you made when you were right" & "how little you lost when you were wrong"