Prudential confirms worst kept secret in town!
The Prudential has today officially confirmed that the acquisition of AIG's Asian operations is dead and buried and the deal has been terminated. An announcement this morning confirmed that Prudential will pay AIG £153 million as part of a break fee agreement with costs for the abortive bid set to total in the region of £450 million. This has been a complete disaster for Prudential and many analysts believe that heads will roll.
It is understood that AIG could have held Prudential to the letter of the original deal which would have seen a shareholder vote on Monday, almost certain to receive less than the 75% majority required, although this would have meant AIG giving up on the break fee. Insiders are suggesting that AIG, 80% owned by the US government, is now looking to float off the Asian operations after refusing to reduce the price tag originally agreed with Prudential.
Next week's annual general meeting will be very difficult for the Prudential management, which has been forced into a humiliating U-turn on the AIG deal. Despite initial reservations from major investors in Prudential the company ploughed ahead with the deal which has cost hundreds of millions of pounds for nothing.
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