Pru to rebuff £17bn Aviva bid

Insurance FSA to probe takeover bid for insider dealing
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The Independent Online

Mark Tucker, the chief executive of Prudential, is to publicly deliver a stinging rebuff to the £17bn bid approach made on Friday by rival insurer Aviva.

Prudential shares soared 44.5p to 672p on Friday on speculation that Aviva was about to swoop on the Pru. Behind the scenes, Aviva's chairman, Lord Sharman, was telling his opposite number at the Pru, Sir David Clementi, that Aviva was willing to pay 700p a share for its rival.

The sharp share movements will be probed by the Financial Services Authority, which only last week complained that insider dealing was taking place ahead of one-third of takeovers.

Lord Sharman's approach has been privately rebuffed, as Mr Tucker believes that Aviva needs it much more than it needs Aviva. Mr Tucker only returned to the Pru last year, replacing Jonathan Bloomer. He had run the Asian operation but left in 2004 and then became finance director of bankers HBOS.

Only on Thursday, Mr Tucker revealed strong results and promised another £40m of cost-cutting. The Pru has an unrivalled position in Asia, with licences in China and a coveted joint venture in India. It also has a thriving US operation.

Aviva, which operates under the Norwich Union brand in the UK, wants to buy the Pru to push forward further consolidation in the life and pensions market. But many analysts worry that Aviva's general insurance and continental businesses will grow more slowly than the Pru's operations.

Aviva is expected to offer Mr Tucker the post of chief executive in an enlarged group, taking over from Aviva's existing chief, Richard Harvey.

This could create tension in the group, as Patrick Snowball, who heads Aviva's UK business, was expected to take over the top job. There would also be tension between Mr Snowball and Nick Prettejohn, who runs the Pru's UK operations.

He would be reunited with a former colleague, Andrew Moss, who quit Lloyd's in 2004 to become finance director of Aviva.