Prudential says pulling out of bid for Asian insurer AIA
British insurer Prudential said Wednesday it was terminating its bid to buy AIA, the Asian arm of AIG, after the US group refused to lower its asking price.
Prudential said in a statement it was "in negotiations with American International Group, Inc. (AIG) for the termination of the agreement (the SPA) for the combination of Prudential with AIA Group Limited (AIA)."
The deal had foundered after AIG refused Prudential's request to cut the price tag of 35.5 billion dollars (29 billion euros) to nearer 30 billion dollars, following a revolt by the British company's shareholders.
In its statement, Prudential said it expected the bid to be terminated, and it would pay AIG a break fee of more than 152 million pounds (224 million dollars, 183 million euros), plus legal fees of 81 million pounds.
Prudential chairman Harvey McGrath said: "While AIA was an excellent opportunity, since we announced the potential transaction we have seen significant falls in the markets.
"We listened carefully to shareholders over the price and initiated a renegotiation of the terms with AIG.
"Unfortunately, it has not been possible to reach agreement so we feel it is in the best interest of our shareholders not to pursue this opportunity. We are therefore withdrawing from the transaction."
The takeover would have been the biggest ever in the insurance sector and would have transformed Prudential into the world's top non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.
© 2010 AFP