Coming up

Don't miss




When big companies want to do good

Read more


Halal tourism on the rise

Read more


Many Turks angry over Syrian refugee situation

Read more


Shakespeare’s 450th Birthday : The Best of the Bard

Read more


The Tour de France, a PR machine

Read more


Coverage of the third plane crash in one week - from France, Algeria and Burkina Faso

Read more


Coverage of the plane crash that took 116 lives - almost half of them French

Read more


Gaza: A Truce At All Costs?

Read more


Central African Republic: Brazzaville ceasefire talks deliver fragile deal

Read more

  • Live: ‘No survivors’ from Algerian plane crash, says Hollande

    Read more

  • Paris bans new Gaza protest scheduled for Saturday

    Read more

  • French families grieve for Algerian plane crash victims

    Read more

  • Protest against Gaza offensive turns deadly in West Bank

    Read more

  • LA Times wipes France off the map in air crash infographic

    Read more

  • Tour de France fans bring the ambience to the Pyrenees

    Read more

  • Halal tourism on the rise

    Read more

  • French lawyer files complaint against Israel at ICC

    Read more

  • Ukraine names acting PM after Yatseniuk's shock resignation

    Read more

  • BNP to pay $80 million for defrauding Dept of Agriculture

    Read more

  • Deadly strike on UN shelter in Gaza Strip

    Read more

  • Wreckage of Algeria plane found in Mali

    Read more

  • Pope meets Christian woman sentenced to death in Sudan

    Read more

  • Italy’s Nibali cruises to victory in 18th stage of Tour de France

    Read more


Prudential seeks AIA price cut to salvage deal

Text by News Wires

Latest update : 2010-05-31

British insurer Prudential has begun talks to lower its $35.5 billion offer for AIG's Asian life insurance arm amid reports shareholders will not back a deal they consider too costly.

REUTERS - Prudential investors will back the group's bid for AIG's Asian life insurance arm provided it can negotiate a 10 percent cut in the deal's $35.5 billion price tag, the Sunday Times reported.

Capital Group, Pru's leading shareholder with a 13 percent stake, is expected to vote for the takeover if the price drops to between $31 billion and $32 billion, and other big investors are also ready to back revised terms, the paper said, citing unnamed sources close to Prudential.

Prudential declined to comment.

Prudential, Britain's biggest insurer, was dramatically forced to reopen price negotiations with AIG last week because it feared the deal, seen by some of its investors as too expensive, might fail to garner the required 75 percent approval at a June 7 shareholder vote.

A Prudential team led by chief executive Tidjane Thiam was holding talks in the U.S. with AIG this weekend, and the company could issue an update on Tuesday, when markets in the UK and U.S. reopen after a public holiday on Monday, a source familiar with the situation said.

If the sides are able to agree on a new price, it would likely be between $30 billion to $32 billion, The Wall Street Journal reported, citing people familiar with the matter.

The Journal also reported that one possibility being considered is an earn-out, which would increase future payments to AIG if the merged business met performance targets.

Prudential is under pressure to unveil any revised terms before 1700 GMT on Thursday, the deadline for institutional investors to register their proxy votes ahead of the June 7 ballot.

Takeover risk

Paul Mumford, senior fund manager at Cavendish Asset Management, said even a 10 percent price cut was unlikely to win over dissident investors.

"I'd be very surprised if the deal goes through, purely because I think it's such a bad deal. A 10 percent cut in my opinion wouldn't be acceptable," he said.

"The sheer risks involved mean that institutional shareholders do need to have a very positive view in order to vote in favour of it."

Any revision to the original deal would require the approval of the U.S. Treasury, which said last week that it had "not considered any alternative" to the Pru takeover.

The Treasury provided AIG with a $182.3 bailout during the financial crisis, and stands to recoup some of the cash through the AIA disposal.

AIG's other options include revisiting its original plan to offload AIA by listing it in Hong Kong, although analysts said last week that weak markets make an initial public offering less attractive.

Separately, the Sunday Telegraph said Prudential had told AIG that while investors might back a deal priced at between $31 billion and $32 billion, a $30 billion price tag would be more likely to succeed.

The future of Prudential's Thiam hinges on the success of the AIA bid, launched by the former Ivory Coast government minister in March after less than a year in the top job.

A collapse of the deal would also be bad news for Robert Benmosche, the head of AIG, who is under pressure to pay off the company's debt to the taxpayer.

Date created : 2010-05-31


    AIG sells Asian arm to UK's Prudential for $35 billion

    Read more