Richard Harvey, the Aviva chief executive, is a highly accomplished insurer of previously flawless reputation who will no doubt survive this blot on his copy book, yet he must have been particularly badly advised to have made such a misconceived bid approach.
The logic of the deal was, I guess, credible enough, the plan being to create a British insurer with the global reach and size to stand alongside the more highly valued European giants of AXA and Allianz. Yet though Prudential might not be quite what it was, to expect such a grand old City name to roll over and let its tummy be tickled was frankly naive. What was proposed was essentially a hostile takeover, but on close to nil-premium terms. Sir David Clementi, the Prudential chairman and a veteran of many a City takeover battle, was never going to have any truck with such a proposal.
The problem that Mr Harvey had was that insurers are so capital constrained by solvency regulations that he couldn't afford to pay any cash. Yet to offer the necessary premium in shares only risked diluting his own investors; the immediate cost synergies from the deal were insufficient to justify anything more than the modest paper premium offered.
Mr Harvey insists the industrial logic of the deal was widely accepted in the City but that the Prudential board refused to listen. True or not, this was no way to go about convincing the Prudential board of the merits of a merger when Aviva was in no position to pay the required takeover premium. Genuine mergers require months, sometimes years of discussion; egos have to be massaged, sceptics won over. Just to charge in unannounced and demand the keys was never the way to approach such an endeavour.
As it is, the whole thing has spectacularly backfired. Rightly or wrongly, Aviva is left looking as if it has gone ex-growth and needs a deal. Widely thought a busted flush little more than a year ago, the Pru comes out smelling of roses. The effect has been to expose Aviva's weaknesses and advertise Prudential's strengths. No wonder Mr Harvey has been left spitting tacks. What was meant to be a triumphant takeover has turned into an exercise in damage limitation.
Capita: sympathy for the devil
One should never feel too sorry for the chairman deposed. Such people live their lives by the sword, so to die by it is a worthy end, generally made all the less painful by mountainous severance terms. Yet I make no apologies for voicing sympathy for Rod Aldridge, the Capita chairman who has been forced to resign over the loans to Labour scandal. He was stupid and naive, but there's not a dishonest cell in his body.
Though I say Mr Aldridge was forced to resign, he didn't of course have to. As he says in his statement, he's going in an attempt to dispel the misconception that the loans helped the company win government contracts in IT and outsourcing.
By resigning, Mr Aldridge is doing the honourable thing, a rare commodity in today's world, where even the old practice of leaving a loaded revolver and a bottle of whisky conveniently placed for use on the library table is rarely enough to do the trick. Too frequently the miscreant chief executive has to be forcibly marched out and executed.
Yet honour is only part of it. There is also a more practical consideration. A company thought to have been trying to buy favours may suffer in any future awards because of the determination of public servants not to be seen to have been swayed. Mr Aldridge's resignation helps clear the air.
As he dwells on the ignominy of his end this weekend, Mr Aldridge will be cursing himself for his own naivity. How could someone whose business is so dependent on government contracts have been so stupid as to make a personal loan to the people on whose patronage he is ultimately dependent?
Anyone who knows Mr Aldridge will vouch for his honesty; he's as straight as a die. In his own mind, he would have entirely separated the political donation from the pursuit of his business interests. Yet it is never enough to know that no corruption was intended. Rather it is the way it looks - what we journalists call "the Private Eye test" - that matters. The question is the same in all walks of life, but particularly so in business and politics. Would you be embarrassed if this ever became known about?
In this case the answer was blindingly obvious. Mr Aldridge says that anyone associated with public procurement would understand that the idea he was trying to buy contracts is spurious. The process doesn't work that way.
Perhaps not, but whatever he says, most people would believe otherwise. And in any case, I'm not entirely sure he's right. Elected politicians are bound to have some sort of influence, if only in making the business opportunity available in the first place. A political loan makes a mighty powerful calling card.
The apparently favourable planning treatment given to another Labour lender, Sir David Garrard, the former chairman of Minerva, could hardly look more suspicious. Whatever the truth, people will look at the known facts and draw their own conclusions.
Business is affected by public policy in a myriad of different ways, so it is unrealistic to think it can be made utterly divorced from politics; business leaders will always want to bend public policy to their own ends. Yet as Mr Aldridge has learned to his cost, to get too close is playing with fire.
Mr Plasterboard joins contract caterer
Don't assume Richard Cousins, we were told by Compass Group, the world's biggest caterer, just a few weeks back when we asked whether he would be the next chief executive. Yes, he's on the shortlist, but it would be unwise to bet on him.
If Compass was banking on someone else, he's plainly not come through, and by default it is to be Mr Plasterboard after all. At least he's available, having resigned from BPB, the plasterboard manufacturer, three months ago following its takeover by Saint-Gobain of France. He's even had time to recharge his batteries.
This always makes the process of recruitment so much easier. Nor, as a consequence, has Compass had to pay him the earth to lure him from somewhere else. It may be a comment on our times that a package worth potentially £3m in the first year is these days regarded as small beer for such a big job. The new chief executive of PartyGaming, an online poker company, gets $6m (£3.5m) in free shares just for turning up.
You have to wonder whether Mr Cousins knows what he's letting himself in for. The industry he's about to enter is completely different from the one he's just left. Moreover, though Compass may be the world's largest contract caterer, it's also in a terrible state.
It's losing contracts hand over fist, morale is rock bottom and, four years after the event, Compass is still struggling to revive the hollowed out corpse of a business it inherited when merged with Granada. Add in the scandal of irregularities in contracts with the United Nations, the subject of a growing mountain of litigation in the US, and the situation could hardly look worse.
Still, Mr Cousins is as strongly focused a chief executive as they come, and he'll see all this as more of an opportunity than a curse. If he fails, people will say it was an impossible task in the first place. And if by any chance he succeeds, he'll look a hero.Reuse content