When Prudential’s ill-fated attempt to buy AIA was first announced, the SCMP was very slow getting on to the story. Today (Thursday) they even seem to have more coverage than the FT (or at least its Asian edition), so I think I wasted HK$28 on the pink 'un. This is one of the SCMP’s three stories:
AIA staff celebrate Prudential deal collapse
Jun 03, 2010
The champagne corks were popping at American International Assurance offices in Hong Kong yesterday after the collapse of the deal with British insurer Prudential.
AIA staff and agents feel more secure in their jobs and are hoping parent American International Group will revive the listing of the company in Hong Kong in the third or fourth quarter. Insiders at both AIG and AIA said a separate listing of AIA would give them a better chance of keeping their jobs and receiving share options.
"I am a shareholder of Prudential and was prepared to vote against the deal," said one AIA staff member. "This is the time to celebrate and we plan to have a drink as our lives can get back to normal now."
The staff member, who did not want to be named, said many AIA staff and agents had felt uncertain since Prudential's offer in March of US$35.5 billion to take over AIA. Their main concerns were job security and change of management style.
"AIA and Prudential have many differences in their history, background and management style," the staff member said. "If the merger had proceeded, many staff and agents might have faced lay-offs."
Prudential would lay off agents from AIA? What would be the point of that? Isn’t it the sales force that they wanted to acquire?
Another person familiar with AIG and AIA said the management and agents have never been happy with the idea of the merger with Prudential. "Management feared a merger would lead to the loss of their jobs while the agents worried about a change of house rules and sales practices," the person said. "For senior management and some agents, many of them hoped the listing of AIA would give them share options."
Well, yes, that seems closer to the truth.
There’s also the hope that the IPO will be back
Hong Kong brokers now expect AIG chief executive Robert Benmosche may revive an earlier plan for a public offering of AIA shares in Hong Kong during the third or fourth quarter to repay a US government bailout.
A person close to the stock exchange said AIA submitted the listing application form in Hong Kong in December last year and that had not been withdrawn. The insurer may, however, have to resubmit a new accounting statement.
Louis Wong Wai-kit, director of Phillip Capital Management, said an AIA listing would be more attractive to investors than Prudential's listing last month.
"Prudential is a British firm while AIA has been the largest insurance company in Asia for many years. Many investors are also its customers," Wong said. "The listing of AIA would be attractive to many local investors as the business is profitable and the brand is well known."
Louis Tse Ming-kwong, a director at VC Brokerage, said AIG may also consider selling AIA if there was another bidder but it would have to be prepared to pay a high price. "I think it is more likely that AIG would revive the listing plan of AIA and this should be a popular initial public offering," Tse said.