Ordinary Gweilo

It's not big and it's not clever, it's just a Brit in Hong Kong writing (mainly) about Hong Kong

recent posts

Archives

Categories

  • Storm warning

    imageAm I the only person in Hong Kong who is happy that Tropical Storm Chathu is apparently heading away from here?

    Earlier today everyone else seemed to be eagerly anticipating a day off on Thursday on the assumption that the Observatory would raise the #8 signal.  Except that it now seems rather unlikely to happen, and all we will get is some rain and a bit of wind as the storm heads past, and maybe the rather unsatisfactory #3 signal. 

    Anyway, my experience is that they usually raise or lower the #8 signal at inconvenient times, so everyone rushes home at the same time and all public transport is horribly overcrowded.  I can’t quite see the benefit of being sent home an hour early and then spending twice as long as normal to actually get home. 

    On the other hand, if you can ignore the hysterical behaviour of your colleagues and stay in the office until most people have fled back home (to stick tape on their windows and rush to the supermarket to stock up on emergency rations) you might actually have a more pleasant journey home.  And busy places such as Causeway Bay take on an almost surreal quality when most people have gone home but buses and other public transport are still operating.

  • Prudential boss takes over at AIA

    The Prudential/AIA saga continues – last week the chairman of AIG quit, and now AIA has replaced its CEO. 

    Mark Wilson was quoted by the FT as saying that he would quit if Prudential acquired AIA, though he probably knew he would have the decision made for him if the deal had gone through.   But instead of being asked to leave by Prudential he has met the same fate at the hands of AIG, who were not best pleased by his candour.

    And the amusing twist is that he is being replaced by someone from Prudential – Mark Tucker, who was very successful in building Prudential’s Asian business (based in Hong Kong) before being promoted to become CEO of the parent company in 2005 (a job he left last year).

  • Air rage

    So there I was in the usual throng of people waiting to get on the plane.  A middle-aged man was trying to get past me, and became upset when I didn’t immediately get out of his way.

    He spoke.  “Typically, I like to be with my children”.  I looked around for a distraught seven year-old, but all I could see were two teenage girls who seemed fairly unperturbed to be momentarily separated from their father.

    But of course I let him through.

  • Invaluable advice

    I was recently asked what “invaluable” means.  Simple enough, but also rather puzzling when you consider that in+valuable should mean not valuable, as in words such as inconsistent and inexact.

    The explanation is that valuable used to mean something that you could value (in contrast to something that is impossible to value, or priceless).  So you might have said that a pound of potatoes was valuable (because we can calculate its value), whereas good advice was invaluable.

    Of course, valuable has now come to mean something with a high value – though it is often used almost interchangeably with invaluable, thus causing great confusion to anyone trying to learn English.   See also: flammable and inflammable.

  • Ovi not so suite

    What is it with people who design upgrades to software?

    I was prompted to ”upgrade” my Nokia PC Suite to Ovi.  This brilliantly designed piece of software thinks that I want to copy all the music and podcasts from my PC to my mobile phone.  I don’t.  And there isn’t space.

    Never mind, it just goes ahead and tries to use up all the space that is available.  Then the phone displays dozens of messages telling me that there is no space.  Well, thanks for that.

    The only solution I could find was to delete most of the podcasts off the phone (to create some space) and then manually remove a lot of the music from the Ovi desktop software.  Eventually it was able to synchronize.  What a mess.

    What were they thinking?

  • Stupid letters

    Why does the SCMP publish a letter from someone living in South Africa about US domestic politics?

    Reject Kagan

    US Solicitor General Elena Kagan’s ascendancy to the Supreme Court should be emphatically rejected.

    Kagan has not yet had time to develop a mature philosophy of judging.

    People need to know of Kagan’s agenda-driven approach to legal interpretation, which in terms of the life issues is out of step with the mainstream of the American public.

    John Smith, Sandton, South Africa

    A quick Google search reveals that a longer version of the same letter has been published in the Barbados Advocate (a publication of which I had not previously been aware), but that “John Smith” claims to live in Brooklyn.  Curious.

  • National Geographic trying to save paper

    Save time and money, it says.img017

    By signing up for two years, you save the Society the expense of sending renewal reminders to you next year (and you help us conserve paper)

    Well, if you want to save paper maybe you could resist the temptation to stuff the envelope with all these different bits of paper.  That I really don’t need.

    Thanks, that’s all.

  • AIA staff celebrate

    When Prudential’s ill-fated attempt to buy AIA was first announced, the SCMP was very slow getting on to the story.  Today (Thursday) they even seem to have more coverage than the FT (or at least its Asian edition), so I think I wasted HK$28 on the pink ‘un.  This is one of the SCMP’s three stories:

    AIA staff celebrate Prudential deal collapse

    Enoch Yiu
    Jun 03, 2010

    The champagne corks were popping at American International Assurance offices in Hong Kong yesterday after the collapse of the deal with British insurer Prudential.

    AIA staff and agents feel more secure in their jobs and are hoping parent American International Group will revive the listing of the company in Hong Kong in the third or fourth quarter. Insiders at both AIG and AIA said a separate listing of AIA would give them a better chance of keeping their jobs and receiving share options.

    "I am a shareholder of Prudential and was prepared to vote against the deal," said one AIA staff member. "This is the time to celebrate and we plan to have a drink as our lives can get back to normal now."

    The staff member, who did not want to be named, said many AIA staff and agents had felt uncertain since Prudential’s offer in March of US$35.5 billion to take over AIA. Their main concerns were job security and change of management style.

    "AIA and Prudential have many differences in their history, background and management style," the staff member said. "If the merger had proceeded, many staff and agents might have faced lay-offs."

    Prudential would lay off agents from AIA?  What would be the point of that?  Isn’t it the sales force that they wanted to acquire?

    Another person familiar with AIG and AIA said the management and agents have never been happy with the idea of the merger with Prudential. "Management feared a merger would lead to the loss of their jobs while the agents worried about a change of house rules and sales practices," the person said. "For senior management and some agents, many of them hoped the listing of AIA would give them share options."

    Well, yes, that seems closer to the truth.

    (more…)

  • Failed

    Well, well.  Common sense prevails (for once) and a huge and stupid acquisition is abandoned.

    Prudential top brass fight for their jobs as AIA takeover abandoned

    Prudential has bowed to shareholder pressure and formally abandoned its attempt to take over the Asian insurer AIA, leaving its management team with a £450m bill as they fight for their futures.

    In a statement released overnight, the Pru said it is terminating its negotiations with AIA, after parent company AIG refused to accept a reduced offer of $30.375bn (£24bn) against the original terms of $35.5bn.

    Pru chief executive Tidjane Thiam, who is under pressure following the deal’s failure, insisted that he was right to target expansion opportunities in the far east.

    "We entered into this potential transaction from a position of strength in Asia and we view the region as offering excellent growth opportunities for Prudential," he said.

    Blah, blah…

    Pru chairman Harvey McGrath blamed recent market turbulence for sinking the "excellent opportunity" to buy AIG’s far eastern assets.

    "We listened carefully to shareholders over the price and initiated a renegotiation of the terms with AIG. Unfortunately, it has not been possible to reach agreement so we feel it is in the best interest of our shareholders not to pursue this opportunity," said McGrath.

    It was never an “excellent opportunity”.  If Prudential have money to invest in Asia they should be using it to grow their own business, or buying much smaller companies that they could absorb.

    The Pru must now pay a break fee of £152.5m to AIA for walking away from the deal, plus £81m in fees to City institutions. The rest of the £450m was incurred in legal and advisory fees, plus the estimated cost of various derivatives contracts which were taken out to hedge the value of the pound against the dollar. These contracts were needed because the Pru planned to raise £14.5bn in a record-breaking rights issue, but pay $23bn in cash. The pound had fluctuated against the dollar in the months since the bid was launched, and some analysts believe this may actually have generated profits, reducing the total cost of the failed bid.

    Leading City investors warned last night that both McGrath and Thiam face calls to step down. Robin Geffen, chief investment officer of the fund manager Neptune, said the pair were guilty of attempting to buy "a large Asian company, at a very high price, with a very unclear strategy". James Chappell of Olivetree Securities questioned whether investors still had faith in Thiam, who became chief executive last October.

    How can investors have any confidence in Thiam?  Surely he has to go.

  • Prudential & AIA: more problems

    Prudential’s madcap scheme to buy AIA is still not going well.  Earlier in the week, the CEO of AIA was reported as telling friends that the deal was “unworkable”, and now they are trying to reduce the price.  And the SCMP finally seems sufficiently interested in the story to have assigned one of its own writers rather than recycling agency reports:

    Prudential seeks price cut to save AIA deal

    British insurer in talks with AIG for discount to win over investors opposed to buyout

    Prudential is scrambling to secure a last-minute discount on the US$35.5 billion price it is paying for Asian rival AIA Group, in a bid to save the controversial buyout that a significant minority of its shareholders oppose.

    The British life insurer said it was talking to AIA’s US parent, American International Group, about changing the terms of the transaction. It would now offer US$30 billion for AIA, analysts at Bernstein Research said, although Prudential did not confirm this.

    While it is highly unusual for shareholders in blue-chip British companies to vote against acquisitions, Robin Geffen, a London-based fund manager who has set up an action group to oppose the takeover, said 20 per cent of Prudential’s investors supported him.

    Even at US$30 billion, some investors say the ambitious takeover remains too risky, because the British firm will still be paying vastly more than its £13.7 billion (HK$155.62 billion) market value for AIA.

    "Discussions regarding the current status of the transaction have taken place between Prudential and AIG and are continuing," Prudential, which is primarily listed in London but also joined the Hong Kong stock exchange on Tuesday, said. "These discussions may or may not lead to a change in the terms of the combination of AIA and Prudential".

    "Paying US$5 billion less is a side issue," said a British fund manager, who owns Prudential stock but cannot talk publicly about individual companies. "And shareholders who are against the deal have other fundamental concerns."

    The investor said Prudential could fail to integrate its already large Asian insurance sales force with AIA’s because the two companies had operated as bitter rivals in this region for decades.

    Well, indeed.  That won’t be easy to solve, as Mark Wilson understands.

    He added that he was "very uncomfortable" with Prudential chief executive Tidjane Thiam’s plan to rapidly transform the insurer into an Asian business.

    "This is a stable British company paying good dividends. After this deal, over 80 per cent of its business would be in Asia. And I don’t run an Asia fund," he said.

    Today, the Observer takes a negative view (Prudential’s bid for AIA wilts under heat of criticism), whilst the Sunday Times seems more positive (Pru wins backing for 10% off AIA) – but why should AIG agree to cut the price when there’s already a deal in place with penalty clauses if Prudential fail to complete on time?