Aviva, the largest insurance company in the UK, has announced the withdrawal of its £16.8 billion ($29.5 billion) all-stock bid for Prudential after having failed to secure the concurrence of the Prudential management. Prudential had rejected the bid on March 18, saying it was not in the best interests of shareholders.
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.
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