03.03.10
PRUDENTIAL MADNESS NOW STALKING ASIA !WOW- LETS DESTROY THE SHAREHOLDERS AFTER THE BANKS EARLIER MADNESS
Needless to say the Pru has changed since the 1970s – but not necessarily for the better. The new chief executive officer (CEO), Tidjane Thiam, is a management consultant from the Ivory Coast, with no particular ties to Britain and few to the insurance business – he had spent a few years as “Strategy Director” of another insurance company after being headhunted from McKinsey & Co. Needless to say, Thiam wanted to make a splash, and not leave the venerable British company looking the same as when he found it.
At first sight, buying a huge Asian operation looks strategically sensible – it makes Prudential a major player in the Asian market and a substantial one in – gasp – China. There are rumors that in order to buy it, Prudential may divest itself of its U.K. operations, thereby losing a low growth business and moving into a high growth business. All very consultantish and clever.
That’s until you look at the question of price. Prudential is paying $35 billion for AIA, which is $15 billion more than the $20 billion AIA was thought to be worth as a stand-alone business. To buy it, Prudential is going to issue shares to AIG, as well as undertaking a $20 billion share issue that will double its capital and dilute the hell out of existing shareholders.
