Prudential confirms talks with AIG
UK giant Prudential has today confirmed that talks are ongoing with AIG regarding the proposed acquisition of the company's Asian life insurance assets. The two companies are discussing price with a likely outcome that the original US$35.5 billion price tag will be significantly reduced and/or the structure of the deal will be amended.
This is welcome news to investors in the UK who were growing more and more concerned about the prospects for Prudential and the fact that the company was seen by many to be "overpaying" for AIG's Asian operations. Whether or not Prudential is brave enough to push through with a significant price reduction remains to be seen but many believe that the US authorities are effectively "over a barrel" because they are looking to reduce their exposure to the company after being forced to bail it out during the recession.
These talks are unlikely to drag on for too long as both parties are fully aware of the difficult stockmarket conditions and both parties would prefer to have the deal rubberstamped and completed as soon as possible. It will be interesting to see who gains the upper hand in these delicate negotiations.
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