Aviva calls off take-over Prudential bid
Our Banking Bureau
25 March 2006
Aviva, while announcing the bid for merger last week had also said that it would not make a hostile bid for its rival and No 2 in the UK insurance sector. "Aviva made clear that its proposal was dependent on the co-operation of Prudential. As this co-operation has not been forthcoming, Aviva has decided to withdraw its proposal," said a statement from Aviva.
However, Aviva said it reserved the right to make an offer if Prudential changed its mind on its original proposal, or if a third party moved in and tabled a firm bid for Prudential.
Aviva is the world's sixth-largest insurance group and the single largest in the UK. It offers life and general insurance, long term investment solutions and fund management services. The group had more than $510 billion in assets under management and had revenues of $57 billion from insurance premium and investment sales.
Prudential UK (unconnected to the US-based Prudential Financial group) offers life insurance and pension management. Its subsidiary M&G Investments provides fund managements to the retail segment. The group owns online financial services provider Egg and US-based Jackson National Life Insurance. It had more than $249 billion in assets under management as at 31 December 2005.
Aviva had said a merger could save £320 million a year before tax and create the world's fifth-largest insurer by market capitalisation.
Aviva, better known for its Norwich Union and Morley Fund Management divisions, is thought by many to be a good fit for Prudential. Aviva is stronger in the UK. and Europe, while Prudential has a larger base in the US and Asia.