Prudential's Thiam apologises after failed AIA bid
Under-fire Prudential chief executive Tidjane Thiam apologised to angry shareholders on Monday for the failed takeover of US insurance giant AIG's Asian unit AIA and vowed to work to regain their trust.
Thiam told the British company's annual general meeting that the collapse of the 35.5-billion-dollar (30-billion-euro) bid to transform the company into an Asian insurance powerhouse had caused "significant strains" for shareholders.
"I deeply regret this," he said. "I will have the task to restore your confidence."
Thiam and chairman Harvey McGrath faced a sometimes hostile reception from shareholders in London after being forced to pull out of what would have been the biggest ever takeover in the insurance sector.
Prudential has been left with a 450-million-pound (540-million-euro, 660-million-dollar) bill for the abortive bid, including a break fee of 152 million pounds.
McGrath insisted the management had pursued the right strategy because it was "an opportunity to accelerate our already strong growth," and he said Prudential would watch AIA's future development and plans for a flotation.
"We will follow closely what happens to AIA," he told shareholders. "It is a competitor and a source of fascination to us.
"Whether they do an IPO (initial public offering) in Hong Kong or not remains to be seen. We will follow these developments closely and see what is sensible to do in terms of shareholder value."
He was responding to a shareholder who asked whether Prudential might consider a smaller rights issue to allow it to take a smaller stake in AIA.
Some individual shareholders made their feelings clear from the floor, with one asking when Thiam would "do the honourable thing and resign."
Thiam, born in the Ivory Coast but with French nationality, said last week he would step down if asked to by shareholders but that major investors were not asking him to do so.
"The vast majority of the top 10 (shareholders) has been supportive," he told journalists after Monday's meeting, but added: "I am servant to the shareholders, if they want me to go, I go."
Asked if he felt he had been vilified, he said: "I keep my feelings to myself."
At the close of trade in London, Prudential shares were down almost four percent at 534 pence on a market down overall by just over one percent.
Several newspapers reported on Monday that at least two of Prudential's top 15 shareholders had approached the company's former chief executive, Mark Tucker, with a view to him replacing Thiam.
One leading investor told the Financial Times: "Mark Tucker was the real architect of the Pru's growing success in Asia, UK and US.
"If he could be persuaded to return for a period, Thiam could go immediately."
But the FT reported that other investors were opposed to Tucker returning to his old job because they fear he could break up the group.
Thiam took a huge gamble by making the bid for AIA just eight months into his tenure.
Thiam had hailed the bid as a potentially transformational deal that would have made Prudential the world's top non-Chinese insurer by market capitalisation, ahead of competitors Allianz and AXA.
It would also have transformed Prudential into an international insurance powerhouse.
But the high price asked by AIG caused a shareholder revolt and Thiam was unable to persuade AIG to lower its demands.
© 2010 AFP