Prudential Plc, the U.K.'s second- biggest insurer said on Sunday that it had rejected a 950 million pounds ($1.9 billion) bid made by Citigroup Inc. for its troubled online banking business, Egg.
"It was clear that it (approach) was speculative and conditional and not in our shareholders' interests to pursue further," Prudential said in a statement.
The British insurer held that it remained committed to integrating Egg with the rest of its operations even as it comes under renewed pressure to decide the future of its entire UK business. "Our focus remains on our continuing review of the UK business and completing the integration of Egg," Prudential said.
Ten months ago London-based Prudential had decided to take full control of the online bank, in a deal that was valued at about 973 million pounds.
The bid made by Prudential initially valued Egg at 118 pence per share, but the bid value was later raised to 135 pence with the rise in the insurer's share price, valuing Egg at about 1.1 billion pounds.
Mark Tucker, Chief Executive Officer of Prudential was forced to admit that, contrary to expectations Egg which produced losses of £40m in the first half is expected to do that again in the second-half.
Tucker is making cost-cuts and is planning to save 150 million pounds a year by integrating Egg with his U.K. life-insurance unit.
“It would be embarrassing for management to make a u-turn now having stressed the savings from integrating Egg with the rest of the U.K. business,'' said Bruno Paulson, an analyst at Sanford C. Bernstein in London
Prudential shares went up 6 pence, or 0.9 percent, to close at 686 pence in London on Friday, Dec. 8. The company was valued at about 16.8 billion pounds.
Insurance Companies Can Now Buy Banks
These days Citigroup has fallen enough in value where they are in a position to be purchased instead. This, of course would be contingent on anybody actually wanting to buy them.
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