MBNA, the US credit card giant, is reportedly preparing a bid of almost £900m for Egg, the Internet bank, which is currently owned by the Prudential, the British insurer. This bid is way below the £1.6bn that Prudential tried to get bidders to pay last year before canceling the auction when bidders failed to put up the cash.
It is reported that MBNA has sought the services of Lehman Brothers to advise it on a bid. The credit card group is expected to make a formal approach to the Pru in a few weeks time. Prudential chief executive Mark Tucker is said to be anxious to cut a deal as soon as possible, " Unlike Bloomer, Tucker was not around when Egg was floated at 160p in 2000; he is not emotionally attached to the bank in the same way. Tucker realizes the thing has to go; yes, price matters, but not as much as it did with Bloomer," an analyst was quoted as saying. He was referring to former Pru chief executive Jonathan Bloomer, who was shut out earlier this year. The Prudential declined to comment on the reported bid.
Analysts say that the fresh bid from MBNA makes sense as Egg, which started out as a savings bank is currently operating around credit cards. A sell-off would be welcomed in the City as the company has said that the proceeds would be disbursed among the shareholders.
A sell-off would also benefit Mr. Tucker, as the failure to sell Egg was viewed as a big failure for his predecessor, Jonathan Bloomer. Bloomer was shunted out Sir David Clementi, the chairman of Prudential. Bloomer had invited the ire of the shareholders by proposing a £1 billion rights issue last October.
Posted
on : Mon, 06 Jun 2005 19:30 GMT | Banking News
By : Anne Philips
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