Does Pru face Capital roadblock to $35.5bn AIA takeover?
I am hearing that the Pru's largest shareholder, Capital Research & Management, is underwhelmed by the British insurer's record-breaking planned takeover of AIA, the Asian arm of the giant, troubled US insurer, AIG.
In fact word reaches my ears that Capital would prefer to see a pre-emptive break-up bid for the Pru than vote through the $35.5bn takeover of AIA.
An authoritative source tells me that a Capital executive recently held talks with a British financial firm, to probe whether that firm would participate in an initiative to dismantle the Pru.
Capital is one of the biggest fund managers in the world. And it is far and away the most substantial investor in the Pru, with a 12% stake.
It can't block the AIA deal single handed. But if it's determined to vote against the takeover, well the Pru would face a big obstacle to completing the deal.
As you'd expect, I put all this to Capital. This was the response of a spokesman:
"I can neither confirm nor deny whether a conversation between ourselves and another British company took place regarding the proposed Prudential-AIA deal, and/or potential alternatives to the proposed deal structure. In general, conversations that we have with others within the industry are confidential, and therefore we wouldn't be able to comment about such matters in any event."
As for the Pru, it says that it has had constructive conversations with Capital and that there are some weeks to go before Capital has to formally make up its mind whether to approve or vote against the AIA takeover.
There are those close to the Pru who believe that if it came to the crunch, the US Treasury - which controls AIG having bailed it out in the autumn of 2008 - would lean on Capital to "do the right thing".
Really? In the home of the brave investor and the land of free-market capitalism, the US government would strong-arm a giant investment firm to put the putative interests of US taxpayers ahead of its clients?
I suppose the US Treasury might try, but there's no guarantee it would succeed.