Prudential in bid to cut price of AIA mega-deal: report

28th May 2010, Comments 0 comments

British insurance giant Prudential is trying to negotiate down the 35.5-billion-dollar price of its planned takeover of Asian insurer AIA in a bid to win over investors, the Financial Times said Friday.

The British company has asked investors opposed to the deal whether a reduced price tag would win their favour in an effort to avoid a "no" vote on the takeover, said the paper, citing people familiar with the situation.

It now hopes to cut the cost to as low as 30 billion US 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, said the FT, citing people close to the situation.

"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."

Prudential refused to confirm whether it was talking to AIG about the price for AIA, but told the paper: "We would constantly have ongoing discussions with AIG on a transaction of this size." AIG declined to comment.

On Tuesday, shares of the British company started trading in Hong Kong and Singapore to help fund the deal. The listings were done by way of introduction, which means adding trading venues without issuing new shares.

Prudential, which is keeping its primary listing in London, is hoping to woo Asian investors ahead of a planned 21-billion-dollar rights issue to buy AIA.

The rights issue also needs 75-percent backing from the British company's shareholders at the June meeting.

© 2010 AFP

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