Britain's Prudential has rejected an approach for loss-making Internet bank Egg, the insurer said on Sunday, after the Sunday Times newspaper reported U.S giant Citigroup was considering a bid.
The Sunday Times said talks between Citigroup and Prudential had encountered hitches but that the U.S. bank was keen to restart talks and may be prepared to pay more than 950 million pounds ($1.9 billion) for Egg.
It said Britain's second-largest life insurer could use the proceeds to expand its fast-growing business in Asia and its U.S. arm Jackson National Life.
Prudential, which has been reviewing its underperforming UK operations since the summer, confirmed an approach but declined to comment on the identity of the bidder or on an offer price.
"It was clear that it was speculative and conditional and not in our shareholders' interests to pursue further," it said in a statement. "Our focus remains on our continuing review of the UK business and completing the integration of Egg."
Citigroup was not available for comment on Sunday.
Last December, Prudential offered to buy out minority shareholders, five years after floating a minority stake and a year after failing to sell the rest of Egg.
Prudential's bid initially valued Egg at 118 pence per share, but a rise in the insurer's share price increased the bid value to 135 pence by the time the deal completed in February, valuing Egg at about 1.1 billion pounds.
Egg's return to the fold has not been smooth, hit by tough conditions in the UK personal loans market. Prudential has said it expects Egg to post a second-half loss close to its 39 million pound operating loss in the first six months.
Egg accounts for only a fraction of Prudential's group business, but the ongoing difficulties and the bank's likely full year loss are a potential embarrassment for Prudential Chief Executive Mark Tucker, who took the decision last year to buy out minority shareholders.
News of an approach -- days after Prudential shares jumped on speculation it could sell its UK life business -- may increase pressure on Tucker, who named a new chief executive for Egg in October.
In the spotlight since the insurer rebuffed a merger approach from rival Aviva in March, Prudential shares have outperformed other UK life insurers by 10 percent over the past 12 months and trade at one of the UK sector's highest multiples, partly on expectations the insurer may restructure its domestic business or become the target for a rival.
The shares closed at 686 pence on Friday to value the business at 16.8 billion pounds.