Pru executives fight for survival after AIA deal is declared dead

The Prudential insisted yesterday that it was backing its chief executive, Tidjane Thiam, and chairman, Harvey McGrath, amid mounting pressure for heads to roll after the insurer's planned $35.5bn (£24bn) takeover of its Asian rival AIA collapsed.

The Pru formally killed off the bid last night after failing to lower the price during talks yesterday with AIA's owner American International Group (AIG). The Pru will hand over a £153m break fee.

The Prudential said Mr Thiam and other executives had "the support of the board". "Tidjane Thiam is the chief executive of Prudential; Harvey McGrath is the chairman," it added, indicating that there were no plans for either to step down.

That could mean a stormy annual general meeting on Monday, at which the Pru had originally hoped to secure shareholders' support for the AIA bid. In addition to the break fee, the life insurer said it had also racked up £300m in one-off costs, which was worse than had been feared. A large portion of that will go to its bankers at Credit Suisse and lead share-issue underwriters JPMorgan and HSBC. The Pru's public relations adviser Brunswick will also take a cut.

Prudential has faced sharp criticism about its communications as the deal progressed, and for paying too much. An attempt over the weekend to cut the price to $30.3bn (£20.7bn) failed when AIG refused to alter the terms.

Mr Thiam said yesterday: "We entered into this potential transaction from a position of strength in Asia and we view the region as offering excellent growth opportunities for Prudential. We agreed with shareholders that a renegotiation of the terms was necessary given market movements, but it has not proved possible to reach agreement."

Analysts are now speculating about a possible break-up of the Pru, with Clive Cowdery's investment vehicle Resolution known to be keen on taking on the UK business. However, others cautioned Prudential to beware of any mergers and acquisitions unless it could secure a sufficiently high price for any of its units. This may prove difficult given the current uncertainties afflicting the world's financial markets.

Experts also raised the issue of Mr Thiam's future after landing the company with such a heavy price to pay from the AIA negotiations.

James Chappell, of Olivetree Securities, said: "Rather than M&A speculation, what the Pru needs now is a period of stability. Shareholders need to carefully decide who they want in charge to achieve this, with next week's AGM pivotal for current management's chances."

Tony Silverman, of Standard & Poor's, added: "Pru will now encounter some uncertainty around the group's future territorial focus and that uncertainty may extend to agents' comfort with group strategy, and even to senior management's tenure."

Shares in the Pru fell yesterday, closing 14.5p lower at 561p.

The runners and riders: Who could replace Mr Thiam at Pru?

Mark Tucker: The return of the prodigal son?

The previous chief executive, who left saying he had achieved what he wanted to and felt he had one more "big job" in him. It is still not clear what that might be and sorting out the mess at Prudential would fulfil the criteria even if it were only as a stop-gap. Tucker will not miss the World Cup (he has attended every one since 1966) but has strong links to the company and shareholders would welcome him with open arms.

Michael McClintock: The safe pair of hands?

Currently the boss of the independent republic of M&G, Prudential's semi-detached fund manager. Has a low public profile and is not really an insurance man, but is liked and respected in the City and could be just the man to steady the ship and restore credibility after the recent upheaval. His links with the investment community could be key to restoring faith in the Pru among its shareholders. But does he actually want the job?

Clive Cowdery: The barbarian at the gates?

Wouldn't be chief executive, but would surely be running things from behind the scenes if his Resolution could secure a takeover of Pru UK. He wants the deal so much it hurts, because it would fulfil his ambition to create a UK 'super-insurer' by combining the business with Resolution's Friends Provident and make him a second fortune. The insurance entrepreneur is, however, a controversial figure and would seek to drive a hard bargain with Pru, which will not enter into another deal without the full support of shareholders.

David Nish: Our friend in the North?

A crazy suggestion? Perhaps, but a combination with Standard Life could make some kind of sense, for the UK business at least. A deal would cement Mr Nish's reputation and make his company relevant again after its failed attempt to tie up with the first incarnation of Resolution a few years ago. And the all-important regulators might well prefer it to the alternative.

James Moore

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Sport
Louis van Gaal watches over Nani
transfers
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
PROMOTED VIDEO
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
transfersColombian World Cup star completes £63m move to Spain
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn