Prudential/AIG In Talks to Reduce the $35.5B Price Tag for AIA Group -WSJ
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The WSJ is reporting that Prudential PLC (NYSE: PRU) could be in talks with American International Group Inc. (NYSE: AIG) to trim down the $35.5 billion price tag for the acquisition of AIG’s main Asian unit, AIA Group.
People familiar with the matter, according to the WSJ, said that negotiations are on going and focused on trying to find an offer that would be acceptable for the shareholders of both companies. A group of Prudential’s top shareholders, including BlackRock (NYSE: BLK), Legal & General and Fidelity, are reportedly seeking a price as low as $30 billion.
Any price cut would have to be approved by AIG, as well as the U.S. government given that it owns nearly 80 percent of the insurer. At this point in the discussions, sources say it is unclear as to just how low an appropriate price could go.
Prudential shareholders have previously pooh-poohed the $35.5 billion price tag, arguing that the price and risk are too high for the Asian unit. Sources cited by the Journal said that these complaints had effectively ended the original deal.
Prudential is attempting to acquire the AIA Group Ltd. from AIG to help tap into the rapidly growing insurance market in Asia. Sources say that a deal for the unit could add 250,000 agents to Prudential's headcount. Prudential reiterated on Thursday that the deal was in the best interest of shareholders over the long term.
"There is no change to our position," a spokesman told the Journal. "As we have said, we believe this opportunity will deliver substantial long-term value for our shareholders."
Prudential launched the biggest share sale in the history of the U.K. to pay for the purchase of AIA last week.
People familiar with the matter, according to the WSJ, said that negotiations are on going and focused on trying to find an offer that would be acceptable for the shareholders of both companies. A group of Prudential’s top shareholders, including BlackRock (NYSE: BLK), Legal & General and Fidelity, are reportedly seeking a price as low as $30 billion.
Any price cut would have to be approved by AIG, as well as the U.S. government given that it owns nearly 80 percent of the insurer. At this point in the discussions, sources say it is unclear as to just how low an appropriate price could go.
Prudential shareholders have previously pooh-poohed the $35.5 billion price tag, arguing that the price and risk are too high for the Asian unit. Sources cited by the Journal said that these complaints had effectively ended the original deal.
Prudential is attempting to acquire the AIA Group Ltd. from AIG to help tap into the rapidly growing insurance market in Asia. Sources say that a deal for the unit could add 250,000 agents to Prudential's headcount. Prudential reiterated on Thursday that the deal was in the best interest of shareholders over the long term.
"There is no change to our position," a spokesman told the Journal. "As we have said, we believe this opportunity will deliver substantial long-term value for our shareholders."
Prudential launched the biggest share sale in the history of the U.K. to pay for the purchase of AIA last week.
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