Aviva’s proposed Prudential merger rejected

On March 16, 2006 Aviva plc sent the board of Prudential a written proposal referencing a possible merger between the two groups, according to Aviva.
Aviva’s board of directors says it anticipates such a merger will be valuable for shareholders of both Company’s, but add that they will only proceed with the proposal on a recommended basis.
Prudential has however rejected the proposal and informing Aviva’s board that it is not prepared to enter into discussions.
This announcement enables both Prudential’s and Aviva’s shareholders to assess the proposal on an informed basis.
The proposal recommends:
* an all-share merger between the two groups;
* a merger ratio of 82 new Aviva shares for every 100 Prudential shares held;
* the merger ratio represents a 10% premium1 for Prudential shareholders;
* an implied value to Prudential shareholders of 708 pence per Prudential share;
* an implied pro forma 2005 dividend uplift of 37%. for Prudential shareholders;
* estimated cost savings of approximately 320 million per annum before tax, attributable to shareholders; and,
* a balanced new board and management team drawn from both organizations, with Richard Harvey as the chief executive.
The merger would represent a strategic plan, which Aviva says will establish a leading global insurer with a pro forma market capitalization of approximately 36 billion and premium income of approximately 40 billion. In addition Aviva says the merged group would also offer a strong global market position.