Prudential rumoured to be on the verge of announcing fundraising details
If market sources are correct British insurer Prudential is on the verge of announcing a $21 billion rights issue which will be priced at a 40% discount to the prevailing market price. This hefty discount is in line with recent fund-raising activities in the market but does reflect concerns about the worldwide economy and the size of the acquisition. The funds raised will be used to acquire AIG's Asian operation which will cost around $35.5 billion and take Prudential into a whole new league.
While there is some concern about the size of the deal and the fund-raising required there is also speculation that Prudential itself could actually be in play. There are also other rumours regarding a possible sale of the company's UK operations which would end a relationship with the UK which goes back over 100 years. Whatever happens over the next few weeks and months there is no doubt that the make-up and the future of Prudential will change dramatically. Whether or not investor confidence in the management is enough to push through this enormous fund-raising exercise remains to be seen.
We are likely to see more and more acquisitions as the worldwide economy improves and opportunities arise for companies with cash in hand to acquire so-called distressed assets.
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