LONDON BRIEFING:A disastrous US oil spill and a mishandled Asian takeover spell trouble at home for UK firms, writes FIONA WALSH

THE CRISES that have engulfed two of Britain’s most illustrious companies, BP and Prudential, are very different but could ultimately end in the same result – the departure of the chief executive and the break-up of the business.

BP’s calamitous oil spill in the Gulf of Mexico is not just an environmental disaster but also a human tragedy, with the lives of 11 oil workers lost when the Deepwater Horizon rig exploded off Louisiana six weeks ago.

As the oil continues to seep ashore, it will ruin many more livelihoods in the days or months it could take BP to plug the leak.

Shares in the oil giant crashed another 20 per cent at one point yesterday as the market digested the failure of its latest plan to shut off the well. Since the explosion, BP’s share price has fallen by more than a third, wiping £44 billion (€52.6 billion) off its stock market value.

Shares in the Pru have also been battered since news of its Asian takeover ambitions leaked out in February. The price was bounding back yesterday, though, reflecting the near-unanimous view that it will be forced to abandon its $35.5 billion (€29 billion) move to buy the Asian insurance operator, AIA, after parent company AIG refused to accept reduced terms.

Unlike BP’s travails, the crisis at the Pru is entirely corporate in nature – essentially, a takeover deal gone wrong – but the repercussions could be every bit as serious for the insurer’s chief executive, Tidjane Thiam.

If the AIA deal is dead in the water, along with the record-breaking £14.5 billion cash call launched to fund it, then Thiam, the former Ivory Coast minister who took the top job at the Pru just six months ago, is surely the corporate equivalent of a dead man walking.

The failure of the deal became inevitable when the growing revolt among Pru shareholders forced Thiam back to the negotiating table with AIG. His own investors made it clear they would not support the $35.5 billion takeover, a deal that would have more than doubled the size of the business and which Thiam described as “transformational”.

It is by no means clear that the revised $30.4 billion offer tabled over the weekend would have won round shareholders, even if it had been accepted by AIG. Having lost the support of his own investors, it seems impossible that Thiam can stay on at the insurer – or indeed that he would want to. He bears the ultimate responsibility for the failure of the AIA takeover, although chairman Harvey McGrath must take some blame.

The move was botched even before it was launched. News leaked out ahead of the formal announcement in March, spooking investors, and was followed by a series of errors and misjudgments. These ranged from Thiam’s failure to explain the move to shareholders and his inexplicable decision, just a fortnight after launching the mammoth takeover, to take on a non-executive directorship at French bank Société Générale.

Negotiations with the City regulator, the Financial Services Authority, were also bungled, leading to a delay in launching the cash call. It later emerged that the 940-page prospectus for the cash call contained a “get-out clause” that could enable Pru directors, including Thiam, not to take up all of their new shares.

A formal announcement that the Pru’s ambitious Asian expansion has been abandoned is expected before next week’s shareholder vote to approve the deal. It is not clear yet whether Thiam will attempt to hang on or go immediately. The affair leaves the insurer with a bill running into hundreds of millions of pounds – the £153 million “break fee” that must be paid to AIG, together with the fees that have already been run up by bankers, lawyers and underwriters.

Much harder to quantify is the damage to reputation. The Pru’s strategy and its chief executive’s vision have been comprehensively shredded, and it must now be wide open to a takeover bid.

BP too looks increasingly vulnerable. There are growing fears that it may be forced to suspend dividend payments as it funds a final bill for the clean-up and compensation that will run into tens of billions of dollars.

Anger in the US over the scale of the environmental disaster has sparked talk of a break-up of the oil giant, with chief executive Tony Hayward under mounting pressure. His recent comment that he wanted the disaster over because “I’d like my life back” was astonishingly insensitive, given the death toll, and has enraged even those who feel the group is doing its best in difficult circumstances.

Such is the scale of the crisis, Hayward’s future hardly matters. Whether he stays or goes, BP is unlikely ever to recover fully.

Fiona Walsh writes for the Guardiannewspaper in London