American International Group Inc.’s appointment of Mark Tucker as chief executive officer of its Asian unit shows AIG may eventually be planning a takeover bid of Prudential Plc’s division in the region, analysts said.
AIA Group Ltd. today named Tucker, who headed Prudential for four years from 2005, as CEO and executive chairman, replacing Mark Wilson. After completing the firm’s planned initial public offering, Tucker may bid for Prudential Asia Corp., the unit he ran from 1993 to 2003, according to Panmure Gordon & Co.’s Barrie Cornes.
Tucker’s appointment “raises the possibility that Pru might be able to sell its Asian operation to AIA at some later date, once AIA has floated,” said London-based Cornes, who has a “buy” rating on Prudential. “AIA may well be able to finance such a deal via its Hong Kong listing.”
AIA was the subject of a $35.5 billion takeover bid from Prudential, now run by Tidjane Thiam, this year. AIG’s board rejected a revised lower offer from Prudential after the U.K. insurer struggled to win over its investors at the previously agreed price. Harvey Golub, AIA’s former chairman, stepped down last week after falling out with Robert Benmosche, AIG’s chief executive officer, for blocking the sale to Prudential.
“This news is likely to generate considerable speculation that one of AIA’s first moves as a quoted company will be to launch a bid for Prudential, with the aim of acquiring Pru’s own Asian units and combine them with its own,” said Eamonn Flanagan, a Liverpool, England-based analyst at Shore Capital Plc who has a “buy” rating on Prudential.
AIG will proceed as soon as possible with an IPO of AIA, listing the division on the Hong Kong Stock Exchange, the New York-based insurer said today in a statement. Former CEO Hank Greenberg said in June the insurer would struggle to reach the $30 billion Prudential was eventually prepared to pay for the division in an IPO.
“There’s a lot of knots they have to untangle before they can raise money” by selling shares, said Ben Collett, head of equities at Louis Capital Markets (Hong Kong) Ltd. Replacing Mark Wilson, AIA’s current CEO, may fuel “uncertainty” around the offering, he said.
Wilson will stay at AIA until the end of the year to ensure a smooth transition before leaving to “pursue other opportunities,” AIG said today in the statement.
Tucker, 52, stepped down as group CEO of Prudential in September last year after four years at the helm of the U.K.’s biggest insurer. During his tenure, Tucker pulled out of a separate bid to buy AIA, continued to expand sales in the company’s Asian unit and raised the share price 35 percent.
Departed Last Year
Before taking up the top job in May 2005, Tucker spent two years as finance director at HBOS Plc, formerly the U.K.’s biggest mortgage lender. Previously, he spent 18 years at Prudential, a decade of which was as head of its Asian division. When he announced his departure from the insurer in March 2009, the Briton said he had “one more big job in me.”
Tucker didn’t immediately respond to a request for comment.
Benmosche, 66, needs to divest the Asia business to help repay $182.3 billion of government rescue money. Earlier this year, he and Wilson disagreed over the proposed sale of AIA to Prudential, with Wilson preferring an IPO, a person with knowledge of the matter said.
AIG had planned an IPO of AIA earlier this year until Benmosche struck a deal in March to sell the unit to Prudential. Wilson, who has led AIA since May 2009, told friends he’d step down if the Prudential transaction was completed because of doubts the integration would be successful, the Financial Times reported May 25, citing an unidentified person.
The deal collapsed after Prudential investors balked at the price and AIG directors including Golub rejected a reduced bid that Benmosche had endorsed, a person with knowledge of the matter said at the time. Benmosche threatened to quit at a June 25 board meeting unless Golub left the company, the person said. The CEO also demanded more control over AIA and urged the board to dismiss Wilson, the person said.