Prudential's increasingly troubled attempt to pull off a $35.5bn (£24bn) takeover of the Asian insurer AIA was in more deep water yesterday as the Pru backtracked on its timetable pledges and delayed stock market listings in Hong Kong and Singapore.
In a statement, the company said that because of an 11th-hour delay to its £14bn rights issue, announced on Wednesday, "all aspects of the timetable for the rights issue announced on 23 April (including the general meeting and its introduction to listings on the main board of the Stock Exchange of Hong Kong Limited and secondary listing on the Singapore Exchange Securities Trading Limited) will be revised."
That appears to call into question a statement by the chairman, Harvey McGrath, on Wednesday that the Pru was still "on track to complete within the timing set out on 1 March". The company had hoped to price the rights issue and issue a prospectus this week. The new shares that will be issued through it are expected to be priced at a discount of about 40 per cent.
However, its plans were thrown into chaos because it failed to secure the Financial Services Authority's approval for the capital structure of the enlarged company once the deal is completed. The FSA is unhappy with the amount of capital in the group's Asian business. A fresh attempt at pricing the rights issue is not expected until the middle of next week at the earliest.
The Prudential is already grappling with resistance to the takeover among leading shareholders and suggestions that a break-up of the group – possibly involving the life insurer Resolution buying its UK arm – would realise more value for shareholders.
However, with the 31 banks involved keen to mine a rich seam of fees, there is strong pressure within the City of London for a deal to go ahead.Reuse content