AIG won't accept lower offer for AIA
By Robert Barr |
June 2, 2010, Wednesday
|
Print Edition
Print Edition
BAILED-OUT United States insurer AIG said yesterday it won't accept lower offer for its Asian insurance business from Prudential, which proposed a US$5 billion cut to calm rebellious shareholders who thought the price was too high.
London Stock Exchange-listed Prudential Plc initially agreed to pay US$35.5 billion for AIA, the Asian insurance business of American International Group Inc. Faced with the growing possibility that it could not win 75 percent backing from shareholders, Prudential lowered the offer to US$30.375 billion.
"After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential," AIG said in a statement. "The company will not consider revisions to those terms."
"The board of Prudential is considering its position," the company said in a brief statement to the London Stock Exchange. "A further announcement will be made when appropriate."
AIG, majority owned by the US government, planned to use the proceeds from the sale to repay US taxpayers for some of the US$180 billion it got in bailout money during the financial crisis.
Barrie Cornes, analyst at Panmure Gordon in London, said he believed AIG had killed the ambitious deal.
"We think that AIG's response is a surprise given the market movement since the deal was announced and the obvious opposition to the excessive price being paid by Pru's shareholders," Cornes said.
Prudential needs to line up support from holders of 75 percent of its shares by next Monday.
If the AIA deal falls through, Prudential will owe AIG a termination fee of US$230.6 million.
Opponents of the deal have formed a Prudential Action Group, which is seeking to muster support for a vote of no confidence in Prudential's Chief Executive Tidjane Thiam. The group claims that at least 15 percent of shareholders intend to vote against the deal.
London Stock Exchange-listed Prudential Plc initially agreed to pay US$35.5 billion for AIA, the Asian insurance business of American International Group Inc. Faced with the growing possibility that it could not win 75 percent backing from shareholders, Prudential lowered the offer to US$30.375 billion.
"After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential," AIG said in a statement. "The company will not consider revisions to those terms."
"The board of Prudential is considering its position," the company said in a brief statement to the London Stock Exchange. "A further announcement will be made when appropriate."
AIG, majority owned by the US government, planned to use the proceeds from the sale to repay US taxpayers for some of the US$180 billion it got in bailout money during the financial crisis.
Barrie Cornes, analyst at Panmure Gordon in London, said he believed AIG had killed the ambitious deal.
"We think that AIG's response is a surprise given the market movement since the deal was announced and the obvious opposition to the excessive price being paid by Pru's shareholders," Cornes said.
Prudential needs to line up support from holders of 75 percent of its shares by next Monday.
If the AIA deal falls through, Prudential will owe AIG a termination fee of US$230.6 million.
Opponents of the deal have formed a Prudential Action Group, which is seeking to muster support for a vote of no confidence in Prudential's Chief Executive Tidjane Thiam. The group claims that at least 15 percent of shareholders intend to vote against the deal.
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