The puffery had those missing elements we have come to recognise in dick-driven ‘economies of scale’ acquisitions: why did AIG want to sell, what was the point, was this the right time etc etc.

In the intervening months, the first Coalition for sixty years, the death of New Labour and then the eurocrisis kept the affair off my radar screen. Now, however, I’m paying attention….and there are very good reasons why.

Two weeks ago I began to notice talk of ‘restructuring’ the deal and ‘rethinking’ things. On 11 May the FT reported that the Pru was pressing AIG for a change in the terms of the deal, ‘in an effort to allay the concerns of the Financial Services Authority (FSA) over Prudential’s capital position.’
(My italics)

This meant that the US government (which owns 80 per cent of AIG) would receive some $2 billion less in cash….taking some new junior loan or hybrid securities issued by Prudential instead.

Hybrid securities, eh? Lovely jubbly. Wonder how many heads they’ve got.

Then last Monday I read in the Wall St Journal that Prudential planned a deeply discounted rights issue to finance the deal. And hot-shot Asia analyst Patricia Cheng said she was concerned by the price tag on AIA. Ms Cheng called Prudential’s Asian expansion plans “unrealistic.”

It was then that Freddie Goodwin and ABNAmro hives broke out all over my left cortex….while my right cortex said, “Dummy – you should’ve started digging on this weeks ago”.

Anyway – I’m digging already, and it doesn’t look good. The markets are turning, there’s Korean War II about to break out, and whatever Jim O’Neill thinks, I am a big bear when it comes to China’s immediate future. Also I’m having my doubts about Harvey McGrath’s foresight factor. Ignoring the FSA’s concerns is one thing; but he’s still to come up with a real raison d’etre behind this hugely costly venture.

For one thing, Mr McGrath told the Pru’s Asian listing press conference, “I’m confident our shareholders see the value this combination presents. The response is constructive… I think the vast majority are very comfortable with the transaction.” The local markets didn’t think so, and gave the Pru’s market debut a loud raspberry.

Harvey stuck his neck out with that statement, despite knowing that vote advisory group RiskMetrics had issued a critical assessment of the takeover bid. RiskMetrics opined that Prudential was paying a high price for the AIA. ‘A full price, integration risk and ambitious targets that barely meet the cost of capital do not make a compelling combination,’ said RM. The advisory analyst has obviously realised that bluntness is the only thing Harvey McGrath gets – but clearly, they pitched the warning a tad too polite.

This saga does not seem to me about whether the shareholders are nuts enough to go with this deal, or not; rather, it’s about that well-documented correlation between the engorged ego and the owner’s sensory equipment. Here we have a whopping rights issue, two warnings, a massive Asian launch to buy something overpriced….and still the Chairman offers nothing beyond airy platitudes about global scale, plus a determination to ask for full speed ahead in the iceberg zone.

More investigation of Harvey fills me with an greate and grievous dredde. He’s an Oxbridge, he used to run a Hedge Fund, and he made his name initially as a Finance Director. Oh dear. He sits on a lot of Quangos. Oh dear, oh dear. He has Alistair Darling eyebrows. Oh my God.

So far, I’ve made a few phone calls about Harvey and his team. Libel laws must restrict my comment on that one: suffice to say that ‘arrogant’ and ‘not good listeners’ played lead roles in the feedback.

Way back on May 1st, the Telegraph’s Damian Reece probably got it right when he wrote of the Pru-AIA deal:

‘The Pru’s got AIA right on strategy, wrong on price and, so far, wrong on execution. Two out of three isn’t enough. One out of three is a disaster’.

Amen to that. We shall see what the shareholders think.