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Prudential Shareholders may derail AIA Deal

Posted on Apr 28, 2010 by Sergio Ulloa ()  | Tags: AIA, Prudential

The possibility of breaking up Prudential appears to be gaining momentum now that a key shareholder of the British insurer raises the prospect of opposing the US$35.5 billion deal to buy AIA Group Ltd. Financing of the deal would be partially funded by a giant US$21 billion share sale, which another top investor of Prudential expressed reservations that the rights issue may not gain approval during the upcoming Extraordinary General Meeting for shareholders. Should Prudential investors be opposed to the rights issue, it would be perceived as a vote of no-confidence in the strategy employed by the management of the company. An alternative suggested by Prudential investors is to breakup the company, disposing of all business carried out in the UK, to concentrate on the development of business done in Asia. The key investors are reportedly drumming up support from other large investors to express their opposition to the massive size of the rights issue, the perceived high price being paid to acquire AIA and potential integration risks for such a large takeover. Previously heralded as a deal likely to tip the balance of the insurance business atmosphere in Asia, the newest hurdle raised by investors may cause delays in the purchase or even undo the initial deal, perceived by many as a much needed one for AIG. Companies mentioned: Prudential Prudential plc LogoPrudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide. AIG AIG LogoAmerican International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Paris and Tokyo. AIA AIA LogoAIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
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