Pru hopes to buy AIG's Asian arm in deal valued at US$36b
By Clara Ferreira-Marques |
March 1, 2010, Monday
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Print Edition
Print Edition
PRUDENTIAL, Britain's largest insurer, is in advanced talks to buy the Asian arm of American International Group in a deal worth about US$35.5 billion, according to sources familiar with the matter.
The talks are going on as AIG, which is trying to pay back the United States government after a US$182.3 billion taxpayer-funded rescue, also moves ahead on its plan for an initial public offering for the unit, American International Assurance, the sources said.
A Hong Kong IPO for the unit is expected to raise more than US$10 billion, depending on the size of the stake that is sold.
Financing for the bid could include a share issue by Pru, the sources said.
One of the sources said Pru Chief Executive Tidjane Thiam, appointed to the top job a year ago, held talks with AIG executives in New York last week. Pru may issue a statement to the market today.
A deal with AIG would be one of the largest overseas deals to date for a British firm and make it one of the biggest insurers in Asia.
Pru operates in 13 Asian markets where it has more than 11 million life customers. Asia, which accounted for 44 percent of Pru's profits in 2008, is also seen as the engine of the group's future growth.
It would also help AIG make a significant dent in its outstanding bill from the government, which owns nearly 80 percent of the insurer and has a US$16 billion preferred interest in a special purpose vehicle that holds AIA.
AIG is also in advanced talks to sell another large foreign life insurance unit, American Life Insurance Co, to MetLife Inc in a roughly US$15 billion deal.
Those talks hinge on a tax issue that the two insurers are trying to resolve.
AIG posted a quarterly loss of US$8.9 billion last Friday, as it struggles to find its feet more than a year after the September 2008 rescue.
The sources did not confirm earlier reports by Britain's Sky News that the cash call could aim to raise as much as 15 billion pounds (US$22.8 billion), making it one of the largest UK rights issues to date.
Pru and AIG declined to comment.
Hong Kong-based AIA is regarded as AIG's Asian crown jewel that manages more than US$60 billion of assets and provides coverage to about 20 million customers, or close to a third of AIG's total customer base.
The talks are going on as AIG, which is trying to pay back the United States government after a US$182.3 billion taxpayer-funded rescue, also moves ahead on its plan for an initial public offering for the unit, American International Assurance, the sources said.
A Hong Kong IPO for the unit is expected to raise more than US$10 billion, depending on the size of the stake that is sold.
Financing for the bid could include a share issue by Pru, the sources said.
One of the sources said Pru Chief Executive Tidjane Thiam, appointed to the top job a year ago, held talks with AIG executives in New York last week. Pru may issue a statement to the market today.
A deal with AIG would be one of the largest overseas deals to date for a British firm and make it one of the biggest insurers in Asia.
Pru operates in 13 Asian markets where it has more than 11 million life customers. Asia, which accounted for 44 percent of Pru's profits in 2008, is also seen as the engine of the group's future growth.
It would also help AIG make a significant dent in its outstanding bill from the government, which owns nearly 80 percent of the insurer and has a US$16 billion preferred interest in a special purpose vehicle that holds AIA.
AIG is also in advanced talks to sell another large foreign life insurance unit, American Life Insurance Co, to MetLife Inc in a roughly US$15 billion deal.
Those talks hinge on a tax issue that the two insurers are trying to resolve.
AIG posted a quarterly loss of US$8.9 billion last Friday, as it struggles to find its feet more than a year after the September 2008 rescue.
The sources did not confirm earlier reports by Britain's Sky News that the cash call could aim to raise as much as 15 billion pounds (US$22.8 billion), making it one of the largest UK rights issues to date.
Pru and AIG declined to comment.
Hong Kong-based AIA is regarded as AIG's Asian crown jewel that manages more than US$60 billion of assets and provides coverage to about 20 million customers, or close to a third of AIG's total customer base.
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