Shareholder storm will rock Pru's boat at AGM

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The Independent Online

The beleaguered life insurer Prudential will today make a further attempt to launch a fightback following the collapse of its $35.5bn (£24.5bn) bid to take over the Asian insurer AIA.

The annual meeting of the company – which lost its shareholders £450m as a result of the deal's failure – will provide an army of small investors the chance to question its board at the Queen Elizabeth Centre in Westminster – a venue the Pru had hoped would serve as the launch-pad for the deal.

The chief executive, Tidjane Thiam, and chairman, Harvey McGrath, are likely to have to answer for their actions at the event, which could prove to be a stormy affair.

Questions have already been raised in the City over the long-term future at the company of the two men, although larger institutions have indicated that they will be given a "stay of execution" to steady the ship after the upheavals of the past months.

Even so, the company created fresh controversy at the end of last week after Mr McGrath referred to those who have called for heads to roll as "outliers". Several shareholders are understood to have demanded meetings with the company to discuss its conducted.

Prudential insists its board remains behind both Mr McGrath and Mr Thiam, while Mr McGrath has said there will be no resignations.

Robin Geffen, the chief executive of fund manager Neptune, which led opposition to the deal, urged small shareholders to attend and voice their unhappiness with the company's actions. "This is their chance, they will not be able to secure a meeting with the company," said Mr Geffen, adding that he was "disappointed but not surprised" by Mr McGrath's comments.

"They have been high-handed and arrogant from the word go," he said. "At the end of the day, somebody needs to be accountable for what has happened. I want to stress that this is my view and my view alone but the position of the chief executive is untenable and I want to know what the non-executive directors are doing here."

Mr Geffen said he had been trying to secure a meeting with Prudential, but the company had failed to respond to his requests. He will not attend the AGM, because he said it would be "inappropriate" for an institution such as Neptune to appear at a forum designed to give small, individual shareholders the chance to put points to the directors of the company.

Prudential killed off the deal after trying to renegotiate the sum it was prepared to pay AIA's state-owned parent company American International Group, after it became clear that shareholders would not accept the $35.5bn price at a time of tumbling world markets.

But AIG turned down a revised $30.3bn cash and shares offer, which required Prudential to pay a break fee of £150m. The Pru has also been forced to pay up £300m to a battery of lawyers, bankers and public relations consultants despite intense criticism of the way the communication of the deal was handled.

While there has been talk that the insurer could now be a candidate for a break-up bid, sources close to it have played this down, noting that capital generated by the UK arm – a target for Clive Cowdery's Resolution Group – helps fuel growth at Prudential's existing Asian business. That operation is still seen as the jewel in the Pru's crown.

Shares in the life insurer closed 9.5p lower at 556p last week.