Prudential faces break-up if AIA bid fails
By Raji Menon and Victoria Howley |
April 29, 2010, Thursday
|
Print Edition
Print Edition
PRUDENTIAL is facing a possible shareholder revolt over its US$35.5 billion bid for AIA, raising the prospect the deal could fail and adding to pressure for a breakup of the British insurer.
Prudential's bid for AIA - the Asia arm of American International Group - has been masterminded by Chief Executive Tidjane Thiam and would be partly financed with a US$21 billion share sale.
Newspaper reports on Tuesday said Prudential's largest shareholder, Capital Research & Management, has reservations about the deal and would prefer a break-up of Prudential.
One other top-10 investor also said the deal might struggle to get the required shareholder approval for the rights issue.
"There is a very good chance they won't get the 75 percent needed - in which case the management would be in a very difficult position; effectively a vote of no-confidence in the strategy of the company," the top-10 shareholder told Reuters.
"There is merit in the argument that more value might be realized if Pru was broken up. We have encouraged Pru to sell its UK business and focus on the Asian business."
Prudential's bid for AIA - the Asia arm of American International Group - has been masterminded by Chief Executive Tidjane Thiam and would be partly financed with a US$21 billion share sale.
Newspaper reports on Tuesday said Prudential's largest shareholder, Capital Research & Management, has reservations about the deal and would prefer a break-up of Prudential.
One other top-10 investor also said the deal might struggle to get the required shareholder approval for the rights issue.
"There is a very good chance they won't get the 75 percent needed - in which case the management would be in a very difficult position; effectively a vote of no-confidence in the strategy of the company," the top-10 shareholder told Reuters.
"There is merit in the argument that more value might be realized if Pru was broken up. We have encouraged Pru to sell its UK business and focus on the Asian business."
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