Newspaper article The Evening Standard (London, England)

Prudential Shoots Ahead as It Goes from Buyer to Target; MARKET ROUND-UP

Newspaper article The Evening Standard (London, England)

Prudential Shoots Ahead as It Goes from Buyer to Target; MARKET ROUND-UP

Article excerpt

Byline: Rosamund Urwin

SPECULATION that Prudential may now find itself the pursued rather than the pursuer pushed the insurance giant up the Footsie winners' list today.

After the delay to its enormous cash call yesterday following a dispute with the Financial Services Authority, some investors now doubt that its acquisition of AIG's Asian arm will go ahead. If the deal does fail, some in the City reckon that the Pru will be a sitting duck for a predator or a group of predators.

"We view Pru as vulnerable should the proposed acquisition be pulled bearing in mind the valuation of the Asian operations," said Panmure Gordon analyst Barrie Cornes. He added that in Resolution, there is already a ready buyer for its UK arm.

On the basis that the deal will not now go ahead, Panmure has raised its rating on the shares to buy and restored its price target of 732p from before the deal was announced. But Cornes believes that Prudential's shares -- up 161/2p at 5651/2p -- are worth 950p if the group is broken up. It came after Resolution, Clive Cowdery's buyout vehicle, said that its investors were prepared to fund a big deal in the insurance industry this year. Resolution was up 0.1p at 70.9p.

Insurers were also helped by a strong trading update from RSA Insurance. RSA rose 3.4p to 121.5p, while Aviva ticked up 6p to 334p.

But while insurers were better, banks were getting a battering amid mounting worries over their exposure to weak European economies.

In fact, the UK taxpayer was once again sitting on a loss on its stake in Royal Bank of Scotland ahead of the bank's trading statement tomorrow.

Shares in the taxpayer-controlled bank slid 1.3p to 49p -- below the average price of 49.9p a pop the Government paid for our 84% stake. The taxpayer's stake in Lloyds Banking Group is also underwater, with the shares down 1p to 59p. …

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