AIG rejects Prudential's lower offer for AIA

1 June 2010

Prudential's attempt to reduce its controversial offer for AIA has failed, with the insurance firm's US owner AIG refusing to accept the lower price.

Following fierce opposition from shareholders over the $35.5 billion (£24.6 billion) deal, the UK insurer entered talks with AIG last week in an attempt to cut the asking price by about $5 billion.

However, a statement issued by the American firm said it would "not consider" any changes to the terms of the initial agreement, which was made earlier this year.

"After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential," AIG commented.

Prudential requires 75 per cent backing from its shareholders to go ahead with the takeover of AIA, but many investors believe it has agreed to pay too much for the firm.

"The board of Prudential is considering its position," the company said in a statement to the London Stock Exchange today (June 1st).

It has previously described the AIA deal as a "one-off" opportunity to capture a stake of the Asian insurance market.

By Claire Archer

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