Aviva fever hits as takeover bid fails

Aviva, the biggest UK insurance company whose Australian interests include Portfolio Partners and the Navigator platform, could be up for grabs after its GBP17 billion bid for rival Prudential fell over last week.

Following Prudential’s knock-back of the Aviva offer, which came less than a week after the proposal became formal on March 16, speculation in the UK has been rife that Aviva itself would come into play. “Aviva made clear that its proposal was dependent on the cooperation of Prudential. As this co-operation has not been forthcoming, Aviva has decided to withdraw its proposal,” the UK company said in a statement last week. However, Aviva reserved its right to make another bid for Prudential within six months. Since Aviva’s rebuttal by Prudential, other interested firms such as Allianz, Axa and ING have all been touted as possible buyers for either Aviva and/or Prudential, Britain’s second largest insurer. But Aviva chief executive, Richard Harvey, denied his failure to secure the Prudential merger revealed his company was devoid of other growth options and therefore open to takeover. ‘It is impossible to consider that the relatively few insurers worldwide — maybe two or three — would be able to mount a bid. That sort of thing does not work,’ Harvey said in the UK press. Instead, Harvey told the UK publication Financial Mail that Aviva was considering other potential takeover targets. “At any one time, Aviva has two, three or four proposals under consideration,” he told the Financial Mail. “We are looking at a range of proposals from around the world.” The collapse of the Aviva offer for Prudential comes less than a month after South African insurance and investment company Old Mutual successfully completed its hostile bid for Swedish firm Skandia and industry observers expect other such deals to soon emerge. Apart from Aviva, Royal & SunAlliance, another UK insurance company with Australian assets, is also rumoured to be on the market. As well, Zurich Financial Services is understood to be in merger talks with the US-based St Paul Travelers group.