Breaking up Prudential would not be straightforward
Global insurer Prudential (PRU) is in the crosshairs as activist investor Dan Loeb took a near-5% stake in the company and urged the FTSE 100 constituent to separate its US and Asian operations.
Loeb runs Third Point, manager of investment trust Third Point Offshore (TPOU) which we recently featured as a Great Idea in Shares.
He believes a break-up of Prudential, which last year demerged its UK and European savings and investment business M&G (MNG), could help unlock latent value in its Asian operation.
Just by shuttering its UK headquarters and running the US and Asian businesses as individual entities with their own local HQs, Loeb believes savings of £200m per year could be achieved.
The US business is lower growth than the Asian arm but is seen in some quarters as providing the necessary cash to underpin Prudential’s dividend. The Asian operations could become a takeover
target if separated from the US business, say analysts.