Newspaper article The Evening Standard (London, England)

Pru 'Vulnerable' after Its AIG Asian Move; Cityspy

Newspaper article The Evening Standard (London, England)

Pru 'Vulnerable' after Its AIG Asian Move; Cityspy

Article excerpt

Byline: Rosamund Urwin MARKET ROUND-UP

COULD Prudential now find itself the target and not the acquirer? The insurer's shares have fallen by almost a fifth since announcing its takeover of the Asian life business of AIG on Monday, and today the talk among traders was that this has left it vulnerable to a bid.

"The Pru being bid for must be a major worry for its bosses as the shares have collapsed," said one trader.

"And given that it is paying in cash and stock for the deal, it'll have to cough up more now," he added.

A suitor from overseas was deemed the most likely possible bidder for the Pru, although another trader dismissed the talk as "spivvy rumours".

It came as some speculated that the takeover deal could collapse.

Most in the City thought it was unlikely that the Pru would walk away, although one broker said: "There must be a level [of the stock] where the pressure to break the deal becomes irresistible."

The Pru will have to pay a [pounds sterling]153 million break fee if it ditches the deal, which it can only do under specific circumstances, which are as yet unclear. It came as Prudential's shares were finally on the up, topping the Footsie winners' list, 17p higher at 5041/2p. The rise was attributed to a technical correction after the past two days' big falls. "Great uncertainty still hangs over the company since the deal," said a trader.

A wilder rumour that Aviva and Clive Cowdery's buyout vehicle Resolution could team up for a bid for Prudential was deemed unlikely.

"That sounds a bit far-fetched," said one dealer, who has often been keen on some of the City's crazier yarns.

Most speculation around Resolution suggested that Cowdery will look at smaller deals or simply wait, rather than make a big move in the coming months.

"We don't think it will be doing any more deals the size of Friends Provident.

It is more likely Resolution will sit on its hands than go on a buying spree," a trader said.

He believes that fears that Resolution will overpay for its next acquisition are weighing on the share price.

"The market is scared they may be forced to buy something at a premium and then do a placing or a rights like Prudential," he said. …

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