Prudential confirms talks with AIG on Asian insurance buyout

28th May 2010, Comments 0 comments

British insurer Prudential said Friday it was in talks with US rival AIG after reports it was seeking to reduce the price of its 35.5-billion-dollar offer for AIG's Asian arm AIA to win over investors.

"We note the recent press speculation regarding talks between Prudential plc and American International Group, Inc," the British group said in a statement. "We confirm that discussions regarding the current status of the transaction have taken place between Prudential and AIG and are continuing.

"These discussions may or may not lead to a change in the terms of the combination of AIA Group Limited and Prudential," it added.

Trading of Prudential shares in Hong Kong was halted Friday following reports the British insurance giant was trying to chop the multi-billion dollar price for its takeover of AIA.

In a statement to the financial hub's exchange, Prudential asked that trading in its shares be halted pending "price sensitive information."

The Financial Times, citing people familiar with the deal, said Prudential has asked investors opposed to the acquisition whether a reduced price tag would win them over in an effort to avoid a "No" vote on the takeover.

It now hopes to cut the cost to as low as 30 billion dollars (24 billion euros, 21 billion pounds), according to the FT.

The monster buyout of the Asian arm of troubled US insurer American International Group (AIG) has been criticised by some institutional investors who are warning they will try to block it

Prudential needs 75-percent approval from its shareholders at a June 7 meeting to proceed with the deal.

The takeover would be the biggest-ever in the insurance sector, transforming Prudential into the world's top non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.

The AIG board and the United States government have not decided whether to accept a lower price or scrap the deal and go back to an initial plan of listing AIA in Hong Kong, the FT said.

"There is less than a 50-50 chance that the deal with Pru gets done," said a person familiar with the matter. "It is easy for us to go forward with an initial public offering when market conditions permit."

The US government is involved because of its bailout of AIG during the global financial crisis.

© 2010 AFP

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