ÌìÃÀÍøÕ¾´«Ã½´«Ã½

The emerging consensus among financial analysts sees ÌìÃÀÍøÕ¾´«Ã½´«Ã½ as the winner in its contest with Prudential (U.K.) for American General. Ironically Pru shares closed up 6.9 percent at around $43 per share, while ÌìÃÀÍøÕ¾´«Ã½´«Ã½ dropped 4.2 percent to close at $76.84 on Wednesday – an admirable demonstration of the seesaw affect in bidding contests; whoever appears to be winning sees their stock price fall, while the loser gains.

While the news made Pru’s bid more valuable, it still isn’t equivalent to ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s $46 a share, and, as the increase was due to speculation that it would lose out to ÌìÃÀÍøÕ¾´«Ã½´«Ã½ in the bidding for Am Gen, it would certainly decline in value, if its chances improved.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s chances were also bolstered by the general opinion that it can be expected to create greater synergies with Am Gen, than Pru could. The acquisition would give ÌìÃÀÍøÕ¾´«Ã½´«Ã½ a very strong position in the U.S. life market, just as that sector is expected to grow in response to the imminent retirement of the “baby-boomer” generation over the next 15 years.

Similarly, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ has indicated that it could achieve greater cost savings, up to $200 million, from the fusion than Pru could. It would also leave Am Gen management largely in place, as ÌìÃÀÍøÕ¾´«Ã½´«Ã½ CEO Maurice Greenberg has often stressed the importance of independent management for ÌìÃÀÍøÕ¾´«Ã½´«Ã½ subsidiaries.

Finally, Greenberg indicated that his interest in Am Gen goes back at least six months, and that there was apparently a failure to communicate between himself and CEO Robert Devlin. He also indicated that he had taken into account the $600 million breakup fee Am Gen will owe Pru if it concludes a deal with ÌìÃÀÍøÕ¾´«Ã½´«Ã½.

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