Pru embarks on US mission to salvage $35bn AIA takeover

Insurance giant seeks to cut price and win over key US investors including Capital

Prudential last night sent a delegation of senior executives to America in an attempt to renegotiate its £35.5bn (£24.5bn) bid for AIA and convince key US shareholders to back the deal.

It is understood that the life insurer is holding discussions with the manager of the second of two key funds run by Capital World Investors, which between them hold the majority of its 13 per cent stake. Capital is by some distance Prudential's biggest shareholder.

The US fund manger is widely seen as being opposed to the deal, but has yet to publicly comment, and has indicated that its funds could take different positions when it comes to the 9 June vote on the takeover. The other Capital manager is based in London.

Tidjane Thiam, Prudential's chief executive, is understood to be at the head of the delegation, which is also expected to speak to Obama administration officials in attempt to renegotiate the terms of the deal. One way of doing this would be to reduce the number of Pru shares allocated to AIA's US state-owned parent AIG. The Pru is believed to be hoping to cut the price for AIA to $30bn as it tries to sweeten the package to its increasingly fractious UK investors, many of whom have said it is paying too much.

Neptune, which has co-ordinated the efforts of dissidents, yesterday claimed that its attempt to scupper the deal had now secured the support of 20.5 per cent of investors – and growing. Of those, just over 5 per cent have signed up through Neptune's action group website, designed to rally opposition to the deal among smaller shareholders.

Robin Geffen, Neptune's chief executive, urged small investors who hold stock through "nominee accounts" to register their votes with their account providers, or custodians. Most need this to be done several days before the actual vote. The cut-off date for some comes as soon as today.

"This could prove to be an epochal event," said Mr Geffen. "Many people were unhappy with Royal Bank of Scotland's takeover of ABN Amro but they were railroaded into it by the City. This time it is different. We are hard at work and we are doing everything we can to assemble the necessary 25 per cent of shareholders that we need to block this. It has been in the last week that we have seen real momentum. What is important for small shareholders with nominee accounts is that they register their votes with their custodians."

Mr Geffen pointed out that the UK stock market has fallen 15 per cent since the deal was announced, while the pound has fallen against the dollar. "That means the cost of this to UK shareholders is considerably more than the $35.5bn," he added.

Prudential, which is planning a £14.5bn rights issue to fund the deal, was yesterday forced to deny that it was planning to pull the plug after rumours swept around the market, sparking a surge in the share price. It followed comments from the US Treasury's chief restructuring officer who said that if shareholders do reject a deal, a return to its original flotation plan for AIA remains "a viable option". Despite the denial, shares in the company finished the day up 35p at 547.5p.

Proxy advisory services – which offer advice on how shareholders should vote – have so far been split on the deal. RiskMetrics has recommended shareholders vote against, giving its reasons as the high cost of capital, integration risk and its belief that the Prudential's profit targets for the business would be difficult to be achieve. But yesterday Glass, Lewis & Co said the deal is in the long-term interests of Prudential shareholders.

In a boost to Prudential, it said: "The transaction offers the company a unique opportunity to bolster its size and establish a leadership position in the Asian markets. Accordingly, we recommend that shareholders vote for this proposal."

But James Chappell, financials sector strategist at Olivetree Securities, said he gave the deal just a 20 per cent chance of successfully completing.

Key shareholders and where they stand

Capital World Investments The big dog. A US fund manager which holds 13 per cent of the shares through several funds. Two main ones, the managers of which are in London and the US. Has said they may vote in different ways, although widely seen as being opposed to the deal. Could prove to be the deal's saviour, or its killer.

Neptune Holds just 0.2 per cent, but the bare numbers underestimate its clout. Neptune has set itself up as the focus of dissidents' efforts to block the deal. Claims to have the support of more than 5 per cent of the shares through its "action group" website and has talked to institutions representing 15 per cent who also plan to vote "no". If they all do that, the Pru will struggle to get the deal through.

Legal & General Tracker fund manager that is one of the most powerful shareholders on the UK market and usually only puts its views out via the regulatory news service. Insurers, anyway, generally dislike commenting on rivals' deals. Has 4.04 per cent of the shares but could vote on both sides of this deal: several big clients have funds managed under segregated mandates giving them the ability to vote as they see fit, eg the BT Pension Scheme.

BlackRock Investment Management Headquartered in the US, with 6.34 per cent in both active and tracker funds. Reportedly less than enamoured of the deal, although rarely makes any public comment about anything.

Standard Life Investments Influential and vocal shareholder that has been sharply critical of the deal. Holds 0.76 per cent.

Aberdeen Asset Management Here because it's a rarity: Has publicly expressed support for the deal's strategic rationale. But says it's still evaluating the price. Stake of 0.63 per cent.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The Green Recruitment Company: Investment Associate – Energy Infrastructure

£50000 - £60000 Per Annum Discretionary Bonus: The Green Recruitment Company: ...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Ashdown Group: Finance Accountant - Financial Services - Central London

£30000 - £35000 per annum + benefits : Ashdown Group: Finance Accountant - Fin...

Ashdown Group: Chief Technology Officer (CTO) - Glasgow

£90000 - £98000 per annum + benefits : Ashdown Group: A truly exciting opportu...

Day In a Page

Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash
I would never quit Labour, says Liz Kendall

I would never quit party, says Liz Kendall

Latest on the Labour leadership contest
Froome seals second Tour de France victory

Never mind Pinot, it’s bubbly for Froome

Second Tour de France victory all but sealed
Oh really? How the 'lowest form of wit' makes people brighter and more creative

The uses of sarcasm

'Lowest form of wit' actually makes people brighter and more creative
A magazine editor with no vanity, and lots of flair

No vanity, but lots of flair

A tribute to the magazine editor Ingrid Sischy
Foraging: How the British rediscovered their taste for chasing after wild food

In praise of foraging

How the British rediscovered their taste for wild food