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Prudential admits to further delays in AIG acquisition

The reputation of the Prudential management is today in tatters with confirmation that planned stock market listings in Hong Kong and Singapore have been delayed due to concerns expressed by the Financial Services Authority [FSA] with regards to capital requirements for the enlarged group. While there are no problems with regards to Prudential itself, it is the massive changes the acquisition would trigger which are causing concern and confusion.

The delay in further aspects of the transaction, aside from the revised timetable for the £14 billion fund raising, is concerning and each delay would appear to put the deal in danger. As we have mentioned on numerous occasions, the company will be forced to pay a £150 million penalty fee to AIG if the deal is delayed or cancelled, as well as massive advisory fees to many parties in the City.

While it is too soon to suggest that the deal will fall through there is no doubt that investor confidence in the management, the timetable and the structure of the deal has been affected. The next week will be vital for Prudential which has itself become a potential bid target for cash rich competitors around the world.

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