Under-fire Prudential chief executive Tidjane Thiam apologised to 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 insurance company’s annual general meeting that the collapse of the ambitious 35.5-billion-dollar (30-billion-euro) bid last week 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 are fighting for their jobs 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 told shareholders Monday that he and Thiam were “utterly disappointed” that the bid foundered after AIG refused to drop its price but insisted that it had been the right course of action to pursue the deal.”AIA was an opportunity to accelerate our already strong growth.
It was a unanimous decision of the board to pursue the deal then pull out,” McGrath told shareholders in London.”We are all utterly disappointed (that the deal didn’t succeed).” “Please don’t be in doubt how sorry we are (about the costs), but we are convinced we were right to pursue this opportunity,” McGrath said.
But one private shareholder, Anthony Watson, made clear his anger at the failed bid, asking the executives: “You’re experts, why did you all get it wrong?”
Major shareholders have approached Prudential’s former chief executive, Mark Tucker, with a view to him replacing Thiam, according to reports on Monday. At least two of the British insurance giant’s top 15 shareholders are touting Tucker, the Financial Times newspaper said.
One leading investor told the business daily: “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, born in the Ivory Coast but with French nationality, took a huge gamble by making the bid for AIA just eight months into his job at the helm of Prudential. 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. Both he and McGrath have insisted no heads will roll following the collapse of the AIA deal.
London, June 7, 2010 (AFP)
