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Delays could cost Prudential dearly!

It is rumoured that clauses in the potential acquisition of AIG's Asian insurance operation by Prudential could see the UK giant penalised to the tune of £153 million if it is forced to walk away or delay the acquisition. When you consider that the company has yet to announce details of its $21 billion fund raising and is indeed in prolonged talks with the Financial Services Authority there could be trouble ahead for the UK giant.

It has also come to light that 38 advisers are charging Prudential £750 million in fees alone for the acquisition, whether it is successful or not. The absence of a no-win no fee situation, or at least a reduced fee clause, has surprised many in the city and does nothing to help the credibility of the Prudential management. This is literally a make or break acquisition for the UK giant and so far it has received a lukewarm response from investors and the delay in talks with the Financial Services Authority are not helping the situation.

Hopefully this should be resolved over the next few days and all talk of a penalty clause should evaporate. There may be confusion and concern in the short-term but hopefully the end result will be the right one!

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