Insurance giant Prudential is meeting key shareholders to drum up support for its $35.5bn takeover of AIA, the Asian division of US insurer AIG, and the $21bn rights issue needed to fund it. The deal is a record for the insurance sector the May rights issue will be Britain's largest ever. Last week, Prudential announced it would bring forward its planned Hong Kong listing to April so that its shares will trade there before the British rights issue.
What the commentators said
Pru is "feeling the heat", said Hester Plumridge in The Wall Street Journal. The shares slid by 15% last week, not least because investors are unhappy at the high cost of funding the deal. Bringing the Hong Kong initial public offering forward is a sensible way to boost support for the rights issue, as it widens the pool of investors who can take part in it.
But chief executive Tidjane Thiam still has "a massive job" ahead to push the deal through by convincing 75% of the shareholders to approve it, said DamianReece in The Daily Telegraph. One controversial issue is the price. If there is "a scintilla of doubt about the growth profile" of AIG's assets, some shareholders will baulk. Execution risk is also a factor, especially given Thiam's relative inexperience.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"He's only been there 20 minutes. We've had ten years of strategic disasters from his predecessors," a senior fund manager told David Wighton in The Times. That's another reason the Pru's pitch, which boils down to 'trust me', hasn't gone down too well, said Wighton. With little detailed information so far, no wonder the atmosphere has been "a bit chilly".
PRU: 521p; 12m change 151%
-
Millions at risk of 'unnecessary' tax bill – how to shield your savingsMillions of Brits could be taxed on their savings interest this year as their savings interest exceeds the personal savings allowance. Are you at risk?
-
Savers will have to wait as long as 48 years to build a £1m cash ISA pot if allowance is cutChancellor Rachel Reeves is rumoured to be planning a cut to the cash ISA allowance in the Autumn Budget, making it harder for savers to build wealth. Will you still be able to build a £1 million cash ISA pot?
