Friday, June 4, 2010

Pru withdraws from 3-month, US$30.4b AIA bid

HONG KONG: Prudential Plc said on Wednesday, June 2 it is withdrawing from its effort to buy AIG's Asian life insurer, an expected move by the UK group after AIG turned down a US$30.4 billion offer for the company.

As a result, Prudential said it will not proceed with a US$21 billion rights offering in London and Hong Kong designed to raise money to finance the deal.

The UK insurer originally offered US$35.5 billion for AIA, then lowered it to US$30.4 billion amid resistance from shareholders that the company was overspending.

Pru estimated the cost of the failed AIA transaction so far at about ''450 million (US$659 million), which includes a break-up fee of ''152.6 million.

"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," Pru Chairman Harvey McGrath said in a statement. "We are therefore withdrawing from the transaction."

Pru did not say that the AIG agreement has been formally terminated but said in the statement that it was "expected". ' Reuters

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