Business View: Pru's 'Waiting for Bloomer' could be nearing its final act

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The Independent Online

The mood at Prudential's headquarters, a hot cake's throw from where the Great Fire of London started, is a bit like Waiting for Godot. Something must happen, but no one is sure quite what.

VLADIMIR: Suppose we repented.
ESTRAGON: Repented what?
VLADIMIR: Oh ... (He reflects.) We wouldn't have to go into the details.

The mood at Prudential's headquarters, a hot cake's throw from where the Great Fire of London started, is a bit like Waiting for Godot. Something must happen, but no one is sure quite what.

The past couple of years have been ones of terrible miscommunication with the insurer's shareholders. This would be hard to forgive in a normal FTSE 100 company, as they all hire expensive armies of advisers to make sure their lines of communication are clear. These advisers are paid for by the shareholders, but serve the directors.

The Pru is the largest investor in the UK stock market - so it should know what investors need to know. Yet it cut its dividend a few months after the head of its investment arm, M&G, wrote to UK companies warning them not to cut their dividends. Was the letter lost in the Pru's internal post?

The Pru also has a chairman who should know more about the City then anyone. Sir David Clementi has had a sparkling career at Kleinwort Benson (as it was then called) and the Bank of England. The Pru had to wait, agonisingly, for him to be released by the Bank. There was a strange interregnum, as Sir David's predecessor, Sir Roger Hurn, had the cloud of his involvement in Marconi over him. Marconi had its own problems communicating with shareholders, of course.

Sir David was strangely quiet in the autumn, when the row over the Pru's £1bn rights issue threatened to cost the head of its chief executive, Jonathan Bloomer. Shareholders argued that the Pru was indulging in more U-turns than Tony Blair. After championing the US, it cheered for Asia, then the UK. After trying to sell internet bank Egg, it dropped the plan and said it needed no more cash. A few months later, it was back, saying it did need cash.

The shareholders at this point went bananas - and Mr Bloomer became as defensive as Exeter City in the FA Cup. Sir David should have publicly stood up for his embattled chief executive. That he didn't had City tongues wagging. But it may have been lack of experience of chairing a public company rather than anything more sinister.

The Pru's decent new business figures last week made it seem as if it was right to invest in the UK business. But the Pru is too scared of putting its head above the parapet to trumpet these figures. And, as we have written on the front page, some shareholders still believe that the Pru's strategy is wrong, and that pushing forward in the US, Asia and the UK at the same time is too much for its stretched management.

But Mr Bloomer cannot afford any more U-turns. To sell the US business would cost the company dearly, not least because of the dollar's weakness. To sell Egg would be embarrassing, because the price is way below what Mr Bloomer turned down a year ago. The answer is, in the words of Winston Churchill, to "keep buggering on".

So if change is not strategic, the only alternative is managerial. Jonathan Bloomer may have apologised for the communication mistakes of the past, but shareholders are unwilling to forgive and forget while he is still at the helm.

Size matters at Unilever

At Unilever, Godot will be turning up Thursday week. This is when the reforms championed by Patrick Cescau will be unveiled. Not before time. The company has gone from hero to laggard, while its arch rival, Procter & Gamble, has gobbled up businesses in Unilever's home territory, haircare and personal products.

Some in the investment community think the best thing is for Unilever to demerge into a food business and a detergents/home products business. These people need their heads (and shoulders) seeing to. In a world of increasingly powerful retailers, the best way for P&G and Unilever to hold their own is to use the influence that comes from their mass.

P&G's merger with Gillette does offer a bit of good news for Unilever. It will take some time to consummate the deal. And while P&G is doing that, it is not thinking about merging with Colgate-Palmolive, a pairing that would really give Unilever a headache.

j.nisse@independent.co.uk

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