Pru float-off set to raise pounds 500m
Wednesday 26 June 1996
Analysts reacted by predicting an imminent bid by Prudential for Woolwich Building Society, which itself is preparing for a pounds 3bn stock market flotation next year. Prudential's shares rose 4p to 409p yesterday.
However, Peter Davis, group chief executive at Prudential, appeared to dampen down the City's bid fever by suggesting that any likely acquisition was up to 18 months away. Woolwich intends to put its own conversion plans to members early next year.
Mr Davis said of the market speculation: "It is a bit disappointing when we are trying to carry out a review and trying to decide what is best strategically for Mercantile and ourselves.
"We have made no secret of our intentions in that area. Because we have been very open, the markets have been expecting us to do it overnight."
Mr Davis added: "The changes of being able to acquire a life company or a building society at a sensible price and to do it immediately are highly unlikely. Expectations have been unrealistic. It might take a bit longer than the market appears to be expecting." He said that floating off about half of Mercantile, valued yesterday by analysts at up to pounds 1.2bn, would occupy much of Prudential's time before late autumn, when the partial listing was expected to take place, subject to market conditions.
The sale of Mercantile follows a strategy review of the entire Prudential group, which has led the company to decide to concentrate on retail financial services and associated fund management activity.
Mercantile is one of the world's big reinsurers, operating in more than 100 countries. In 1995, the company had wrote gross premiums of pounds 1.3bn and contributed pounds 196m, almost 25 per cent, to the group's pre-tax profits of more than pounds 800m.
Mr Davis said: "After careful consideration, we have decided that the synergy between Prudential and Mercantile is not all that great and [we know] that the management [there] would like to grow the business." The proceeds might be used to fund its future acquisition strategy, he added. Although the Prudential's primary aim is to seek a listing for about half the subsidiary, if a suitable offer for the entire business were to me made, the company would consider it carefully, he added.
John Engestrom, chief executive at Mercantile, said: "We welcome this decision and believe that our resulting higher profile and independence will assist us in further reinforcing our already strong market position, especially in life and health reinsurance."
Despite the Prudential's comments, analysts claimed a potential bid for the Woolwich was the likely result of the pounds 500m-plus, which the company hopes to raise from its partial disposal. While Mr Davis said a life company acquisition could be funded through shareholder interest in the Prudential's own life fund, thought to be up to pounds 2.5bn, a society takeover on the scale of the Woolwich might still require a significant rights issue.
- 1 PlayStation and Xbox hacked by Lizard Squad
- 3 The Grace Dent Christmas Questionnaire
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
PlayStation and Xbox hacked by Lizard Squad
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
Boxing Day snowfall set to push even more bargain-hunters online for sales
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...