Prudential delay casts doubt on AIA deal
Source: Agencies |
May 6, 2010, Thursday
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Print Edition
Print Edition
BRITISH insurer Prudential Plc yesterday delayed a planned US$21 billion rights issue, raising fears about the US$35.5 billion takeover of Asia-based life insurer AIA Group.
The insurer had planned to detail yesterday the pricing of the cash call and of the acquisition it is intended to fund, but instead said it was continuing discussions with the Financial Services Authority about the terms of the deal, particularly the capital position of the enlarged group.
The announcement, coming amid turmoil in world stock markets, saw Prudential's shares drop 1.4 percent to 550.5 pence (US$8.34) in midday trade in London.
Prudential said it does not expect the delay to affect the overall timing for the completion of the AIA purchase, which it plans to close during the third quarter of this year.
"We are entirely committed to the transaction and remain on track to complete it within the timing set out on March 1," said Prudential Chairman Harvey McGrath. "The work completed since March 1 with the AIA and Prudential teams has convinced me more than ever that the enlarged group will be in a position to capture sustainable and highly profitable growth."
American International Group Inc is selling AIA to restructure and repay the US government for its bailout.
The insurer had planned to detail yesterday the pricing of the cash call and of the acquisition it is intended to fund, but instead said it was continuing discussions with the Financial Services Authority about the terms of the deal, particularly the capital position of the enlarged group.
The announcement, coming amid turmoil in world stock markets, saw Prudential's shares drop 1.4 percent to 550.5 pence (US$8.34) in midday trade in London.
Prudential said it does not expect the delay to affect the overall timing for the completion of the AIA purchase, which it plans to close during the third quarter of this year.
"We are entirely committed to the transaction and remain on track to complete it within the timing set out on March 1," said Prudential Chairman Harvey McGrath. "The work completed since March 1 with the AIA and Prudential teams has convinced me more than ever that the enlarged group will be in a position to capture sustainable and highly profitable growth."
American International Group Inc is selling AIA to restructure and repay the US government for its bailout.
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