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Is the Prudential deal dead in the water?

There are growing concerns regarding the proposed $35.5 billion acquisition of AIG's Asian operations by UK outfit Prudential. The company has already been forced to delay confirmation of a $21 billion fundraising exercise after talks with the Financial Services Authority (FSA) stalled due to an issue over the capital requirements for the enlarged group. Initially it was believed a 24-hour delay was agreed but consequently this has been extended and injected confusion and concern into the marketplace.

When you also take into account that Prudential has already agreed a penalty clause in excess of £150 million, if the deal is delayed or cancelled, the situation is now critical for the company and the company's management. Investors have been concerned about the size of the transaction since it was initially announced some time ago although a road show by the company's management had appeared to put some investor minds at rest. However, the ongoing issues with the FSA and the delay in announcing the fundraising, not to mention concerns about the overall state of the worldwide and European economies, are creating something of a nightmare scenario. The next few days will be critical for this particular transaction with the reputation of not only Prudential's management on the line, but the company as a whole.

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