Prudential overestimated failed AIA bid cost
From Asia Aug 12 2010 BY: Simon Danaher
, Online News Editor
, International Adviser
Prudential overestimated the cost of its failed bid to buy Asian insurance giant AIA earlier this year by nearly £100m.
When the bid was finally scrapped at the beginning of June after talks to renegotiate Prudential’s offer with owner AIG failed the company estimated it would have to pay around £450m in costs. This constituted a break fee of £152.569m, arrangement and underwriting fees of approximately £81m, with the balance relating to advisory and other fees.
However, in its half year report, released today, the company said the total cost had actually amounted to £377m.
The proposed takeover became a very contentious issue for the company and its shareholders, with a shareholder action group, led by Neptune Investment Management Robin Geffen, taking the lead in criticising and calling for the bid to be halted.
Despite the misgivings of shareholders, such as Geffen, the company intended to launch a £14.5bn rights issue to pay for the purchase which was eventually also scrapped.
In a statement released today, Prudential chief executive Tidjane Thiam, said despite his disappointment at the failed bid, Asia remained the region with “the best potential for high growth and the prospects for future profitable organic growth remain excellent.”
His remark was supported by new business sales in Asia of £713m during the first half of 2010, an increase of 36% on the same period last year.