THE collapse of the $35.5bn (£25bn) AIA takeover means Prudential will focus on smaller bolt-on acquisitions rather than headline-grabbing mega-deals, the firm indicated yesterday.
Asked by a small shareholder to comment on some of the lessons learned from the implosion of Prudential’s bid for AIG’s Asian subsidiary, chairman Harvey McGrath said: “In the post-crisis world we live in, doing large cross-board acquisitions in financial services is going to be very difficult.”
McGrath said investors should expect smaller, opportunistic purchases as a way to propagate the group’s strategy in the Far East. He pointed out its £192m takeover of Singaporean life insurer UOB in January as an example.
But despite the mishaps of the past 14 weeks, he refused to rule out another approach for AIA in the future. Mark Tucker, the previous chief executive of Prudential, modelled its Asian operations on those of AIA, which McGrath said were a source of “fascination”.
“They are a competitor and we are obviously interested to see what happens to the business after our transaction was not consummated, so let’s see,” he said. Asked on the topic again later, McGrath added: “Whether they do an IPO [initial public offering] remains to be seen. We will follow all developments with interest.”
The non-executive boss dismissed the idea of floating Prudential’s own Asian arm in the immediate term, which some analysts and shareholders have speculated on as a way to realise its value.
“The board does regularly review where value can be created and that includes whether there are better ways in which ownership of elements of the group can be better effected,” he said. “[But] it’s not in our view, in the short term, the right thing to do.”
Meanwhile, chief executive Tidjane Thiam reaffirmed the company’s commitment to the UK after hints its British arm could be sold off.