ImPrudential insurance

Pru analysts: The ingredients for a successful takeover are simple: an established executive team, a deal size which the purchaser’s balance sheet can stand, and a price which does not hand all the prospective gains to the vendor.

Prudential’s attempt to bestride the life assurance world failed on all three counts. However talented chief executive Tidjane Thiam may be, he was not established at the Pru. He had only been at the UK insurer a few months. His finance director, Nic Nicandrou, joined in October 2009. Both have relevant experience, but a single set of decent results is hardly proof that they have discovered how this opaque company really works.

The purchase of AIA would have destroyed the Pru's balance sheet. The huge rights issue effectively obliged the shareholders to back it or face massive dilution. Essentially, the Pru would struggle to afford AIA, however attractive it might have been.

Even this obstacle might have been overcome, had the price been right. It clearly wasn’t, long before the last-ditch attempt to persuade American International Group, the US-government-controlled parent, to accept less. Rival bidders were conspicuous by their absence, and while the Pru kept emphasising AIA’s strength in Asia, its share is small in mainland China and non-existent in India.

Also conspicuous by its absence was objective comment from analysts who claim to understand this complex, jargon-riddled sector. The fees, a grotesque $650 million, allowed most of the City’s banks a slice of the pie, at a price — radio silence from their analysts. Tim Young at Euler Securities, one of the few who spoke out, describes the bid as “one of the most disastrous campaigns in corporate military history”.

After such a defeat, it’s clear that the existing management must go. There is no shortage of experienced candidates to take over, but persuading one of them to try and repair the damage done to this valuable old name promises to be much harder. Business as usual it ain’t.