Ping An poised to pounce as Pru prowls for own prey

Published on Wednesday 23 January 2008 20:53

INSURANCE giant Prudential saw its shares leap yesterday on speculation that Chinese insurer Ping An was close to taking a $13.8 billion (£7.1bn) stake in the company.

Separately, chief executive Mark Tucker admitted he was looking to cash in on the current economic turmoil to snap up rival firms at budget prices.

Reports in China's 21st Century Business Herald newspaper yesterday quoted an unnamed source claiming Ping An was interested in a stake in the Prudential, but Tucker refused to comment on "market speculation".

Shares in Prudential spiked 10 per cent higher in early trading yesterday, but closed just 1.21 per cent or 7.5p up at 626p.

Ping An Insurance is currently in the process of raising 11bn through the sale of bonds and additional shares, which reports have suggested could be used to fund investments in Europe and the United States.

Tucker, currently at the World Economic Forum in Davos, said he was looking for bolt-on acquisitions in the US and Asia.

He said: "We have the cash, the capital and the risk appetite, and we will continue to watch and see. We certainly look for opportunities at these times."

He added: "We do not comment on market speculation and rumour.

"We always welcome long-term shareholders. We talk to a number of different shareholders, talking about any one specific one is not appropriate. I don't know what the intention is."

A full-blown takeover move is not thought to be on the cards, but China's insurance giants are reportedly being encouraged by their government to strike up negotiations with major western players about buying stakes.

The Prudential already has a strong presence in Asia, with life insurance operations in 12 markets.

Its Asia operation delivered the strongest growth in the company's third-quarter results, which were published at the end of October.

Nine-month revenues for the arm were 48 per cent higher at 939 million on an annual premium equivalent basis – the insurance industry's standard measure, comprising new regular premium sales plus 10 per cent of single premiums.

The news came as odds on a Chinese takeover of Scottish textile company Dawson International appeared to lengthen after the suitor said there was still "considerable uncertainty" in the discussions.

Last August Dawson confirmed it was in talks about a possible sale to Zhongyi Cashmere Company – the second time the company had entered takeover talks in less than a year.

Lingwu-based Zhongyin has confirmed that its principal shareholder, Ma Sheng Guo, had held preliminary discussions with Kinross-based Dawson, but said no agreement had been reached.

"There is still considerable uncertainty on this issue," the company said.

A spokeswoman for Dawson said Zhongyin had been obliged to make the statement under Chinese reporting rules. She declined to comment on the talks.