Will the Prudential walkaway from AIG?
Rumours in the market this afternoon suggest that AIG is refusing to play ball with the Prudential regarding a potential takeover of the company's Asian division. It was assumed that AIG was in a fairly weak position and would agree to a reduction in the US$35 billion price tag but this would not appear to be the case. This now leaves the Prudential in a very difficult situation, having played its hand and effectively lost this game of high risk of poker.
Despite the fact that the U.S. Treasury owns 80% of AIG, and it was assumed was looking to raise as much cash as possible in the short term, many expect the deal to be called off later today. There have been suggestions over the last few weeks that the US authorities had a "plan B" in place regarding the Asian operations with a potential flotation or sale to another third party. Whether or not this is the case remains to be seen but there might just be one last sting in the tail with regard to this particular debacle!
In many ways the Prudential management placed their reputation and their future on the line to try and agree terms on the AIG acquisition. Are they about to lose everything?
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