As AXA was toasting the endorsement of GRE's board for its 389p-a-share cash-and-paper offer, some shareholders questioned whether the deal represented the best offer, given that another group, Eureko, had tabled what seemed a more attractive deal.
Under the AXA offer, each GRE share will be worth 249p in cash and 0.243 new shares in Sun Life & Provincial Holdings, the London-listed company which is majority-owned by AXA.
GRE's board, already under fire for the way it has handled the three- month auction, ran into immediate criticism from shareholders, who believed better offers were available. The market too, appeared to shy away from the deal, pricing GRE's shares at 360p.
"If the board have recommended an offer from AXA when there is a higher offer on the table, then we need to know why," said one institutional shareholder, who declined to be named. "The fact that GRE's share price has fallen to 360p says it all."
Another said: "The situation is not yet closed. It is still open for Eureko to come back with a firm offer."
According to sources close to the deal, AXA's bid of 389p was chosen over the rival Royal and SunAlliance bid because the latter was unable to offer a full cash alternative and some shareholders were unwilling to take its paper.
Part of the reason was that shareholders had become tired of waiting for things to turn up at GRE - particularly after results like yesterday's, which showed a plunge in profits from pounds 872m in 1997 to pounds 292m. They wanted a cash exit.
According to the sources, Eureko, which has had trouble all along surmounting the credibility barrier, had made an indicative 385p a share cash offer but wanted to make a formal offer conditional on getting full access to the books. Directors decided instead to plump for the firm no-strings- attached offer from AXA.
GRE's board and its advisers, Morgan Stanley, feel they have done well to get this much for a company which, before the auction began last November, was judged by the market to be worth barely pounds 3 a share.
Nevertheless, some shareholders believe they have a gripe. While the AXA/Sun Life offer valued the GRE shares at 389p when the markets opened yesterday morning, by late afternoon the Sun Life shares had come off 10 per cent.
Because of the paper element, the value of the AXA offer was closer to 378p.
Yesterday there was still a possibility that Eureko might come back with a hard cash offer, something which would please the discontented shareholders. However, Schroders, the biggest shareholder, is in favour of the AXA deal.
"The auction has been conducted fairly," said Schroders' Jim Cox. "You have to remember that this is a business with employees and customers and there is a limit to how long the uncertainty can go on."
John Robins, GRE's chief executive, yesterday declined to answer questions on the deal, which will see him leave the group over a year ahead of his February 2001 retirement date.
Mr Robins appeared opposed to a deal as recently as last summer, arguing that GRE had a good future as an independent group focusing on protection insurances such as health insurance and critical illness.
Mark Wood, chief executive of Sun Life & Provincial, yesterday said he expected job losses "in the hundreds, not the thousands" from a combined UK staff of around 17,000.
Savings of around pounds 50m would come from cutting head office costs, closing duplicated branches and slashing corporate expenses.
The deal represents a victory for AXA and spells humiliation for two rival bidders, the British competitor Royal & SunAlliance and Eureko, the consortium of nine European insurers which includes Friends Provident.
Sun Life & Provincial holding company will only keep the UK and Ireland operations, worth pounds 1.88bn.
It has already arranged to sell GRE's US property and casualty companies to Liberty Mutual, a US insurer, for pounds 888m.
GRE's German business, GRE Albingia, will be sold to AXA's German division, AXA Colonia, for a further pounds 588m. Some of the proceeds of the sale will be used to pay off nearly pounds 300m in foreign-denominated debt.
If the deal is approved by shareholders, it will mark another giant leap in the French group's ambition to beat rivals such as Allianz, Aegon and Generali as Europe's dominant insurer.
The deal will make AXA the third largest general insurer in the UK, behind CGU and Royal & SunAlliance, boosting the amount it attracts in general insurance premiums from pounds 500m to pounds 1.7bn.
It will hold the number two position in private health insurance - through Guardian's ownership of PPP - and the number three position in UK life insurance. AXA, already one of the world's biggest investment managers, will also have pounds 55bn to manage in the UK alone.
The BIFU finance union yesterday welcomed the deal, citing assurances from AXA that the job losses would be in the hundreds. Had Royal & SunAlliance won out, the union feared up to 5,000 job losses.
But for customers, yesterday's deal may not prove as welcome.
Andy Homer, the future chief executive of AXA's general insurance arm, yesterday indicated that the group would soon start to raise motor insurance premiums in an effort to improve profits at the business.