Prudential chief faces shareholders after failed takeover

6th June 2010, Comments 0 comments

Prudential chief executive Tidjane Thiam will face the British insurance giant's shareholders Monday amid calls for his resignation over a failed takeover of AIG's Asian unit AIA.

The annual general meeting was supposed to confirm the 35.5-billion-dollar (30-billion-euro) takeover of AIA, but the hugely ambitious deal collapsed last week after AIG refused to accept a lower offer.

Prudential was left with a 450-million-pound (540-million-euro, 660-million-dollar) bill, including a break fee of 152 million pounds, and a number of shareholders are calling for Thiam's head.

"Someone at board level should be accountable for the losses associated with this failed deal," said Richard Buxton, head of UK equities at Schroders.

"Blaming the weakness of markets for the failure of shareholders to approve the deal is disingenuous."

The Franco-Ivorian chief executive has been in his post for just eight months -- he was previously finance director of the group, and before that, worked at rivals Aviva.

Both he and chairman Harvey McGrath have insisted that no heads will roll following the collapse of the AIA deal.

"No one has offered to resign and no one has been asked to resign," McGrath told the Financial Times Friday, saying the shareholders calling for change were "outliers" and the biggest investors supported the top team.

Thiam also told the business daily: "It is a clever thing to try and connect my inability to seal a 35-billion-dollar deal with my broad ability to run a company, but it is a fallacy.

"To say I'm inexperienced in running a 35-billion-dollar transaction, that's true. Not many have experience of running a 35-billion-dollar transaction."

Thiam took a huge gamble in making the bid, in what would have been the biggest ever takeover in the insurance sector and was intended to transform the 162-year-old firm into an international insurance powerhouse.

But when turbulent financial markets made the original price tag impossible, he was unable to persuade AIG to re-negotiate a cheaper deal.

Thiam took over last October amid huge excitement, becoming the the first black person to lead a major British company. He was described by ING analyst Kevin Ryan as having a "brain the size of two solar systems".

The 47-year-old diplomat's son was born in Ivory Coast and became the first Ivorian to study at France's prestigious Ecole Polytechnique. He received an MBA from INSEAD and in 1988, he joined US consultants McKinsey in Paris.

In 1994, he returned to Ivory Coast at the request of president Henri Konan Bedie. Thiam always said he was proud that "politics didn't kill" in his country, and he joined the cabinet as secretary of planning and development.

But at Christmas 1999, when Thiam was abroad, the government was overthrown. While he briefly went back, he found himself confined to his house and so left, and for six months "I had no job, no career, nothing at all".

On the plus side, he said "it taught me a lot about myself. If you've been in a situation where you have nothing, there's nothing much you're afraid of".

There was yet more disappointment when he returned to France, where he complained his African origins barred him from achieving high office.

A strong believer in meritocracy, he responded by taking his American lawyer wife and their two sons across the Channel to Britain in 2002, where he joined Aviva and developed a love of Arsenal football club.

Thiam faces another difficult situation this week, but is keeping his cool as he insists he will keep his job.

"We are doing very well, we (Prudential) are in a very good health, I hope that it will contribute to the image people will keep of me," he said.

© 2010 AFP

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