Prudential launched a last-ditch bid to salvage its $35.5bn (£24bn) takeover of the Asian insurer AIA as more investors lined up to criticise the British company yesterday.
Bosses of the beleaguered Pru – including the chief executive, Tidjane Thiam, and his team – have been in the US since the middle of the week, hoping they can negotiate a reduction in price to nearer $30bn to quell a mounting shareholder insurrection.
They are expected to work through the deal with AIA's parent company, American International Group (AIG), this weekend but have precious little time to do so because they are due back in the UK for more meetings with institutional shareholders on Tuesday.
Tuesday is also the cut-off date for many small investors to register their votes with custodians who hold their nominee accounts. In a close ballot, these votes could be crucial.
The fund manager Robin Geffen, chief executive of Neptune Investment Management, is co-ordinating the efforts of dissident Pru shareholders. He said last night: "Talk is cheap. We'll see what they come up with. If they get [the price] down to two or three dollars then I might be interested. This is what they should have been doing a long time ago. They must have realised that they were not going to get the 75 per cent support they need."
Mr Geffen and other investors have been sharply critical of Prudential and its advisers for offering to pay too much for AIA. They accuse the Pru of failing effectively to communicate the merits of the transaction they are asking shareholders to fund with a deeply discounted £14.5bn rights issue. The renegotiation, revealed by The Independent yesterday, could be the "last throw of the dice".
Mr Thiam needs 75 per cent of investors to support the rights offer for the deal to succeed. Analysts have been warning that he and possibly the Pru chairman, Harvey McGrath, will have to go if the transaction collapses.
AIA is owned by AIG, the bailed-out insurer effectively owned by the US government, which has said plans to float the business could be reconsidered if the Pru's takeover fails. However, analysts are divided about whether a sale at nearer $30bn would recoup more for the Treasury than might be achieved through a flotation at a time of high market volatility.
The fund manager F&C joined the growing list of shareholders publicly opposed to the deal at its current price, although it said it was not against Pru's international expansion strategy. Peter Lees, F&C's head of UK equities, said: "We are not concerned about the group's capital position, which we accept would likely improve on the back of the disposals which have been announced. We do, however, feel the transaction involves very significant execution risk, given its sheer scale and complexity. In our view, these risks, when set against the current price of the transaction, leave virtually no margin for error in the delivery of revenues and cost synergies.
"Therefore, while we are supportive of the strategic direction management is trying to take the company in, regrettably the economics of the deal as it stands mean we are unable to support the transaction."
Paul Mumford, a senior fund manager at Cavendish Asset Management, said even a deal at lower price was now "untenable", adding that the Pru had "woefully misread the appetite of shareholders" for such a takeover and "lost" their confidence.Reuse content