Is the Prudential acquisition of AIG's Asian operations in danger?
This weekend there are renewed fears regarding the proposed acquisition of AIG's Asian operations by UK insurer Prudential. A number of investors are concerned that the USD21 billion rights issue announced last week could be in danger due to problems in the sovereign debt markets as well as a potential slowdown in the worldwide economy. So what are the options open to Prudential?
There is intense speculation in the marketplace that the company may well look to renegotiate the price of the Asian operations with some brokers suggesting up to USD7 billion could be shaved from the original USD35.5 billion price tag. A number of investors have also highlighted the fact that AIG shares have fallen by twice the rate of the fall in the US market since the Prudential deal was announced. Many believe this is simply growing concerns that the deal may not go through or the price may need to be renegotiated.
In many ways everything which could go wrong has gone wrong for Prudential with criticism of the management, a hold up of talks with the FSA and a sudden fall in worldwide stock markets. Whether the deal will go through remains to be seen but this is something of a battle!
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