Prudential 'looking to reduce AIA price tag by $5.5bn'

28 May 2010

Prudential is looking to renegotiate its deal to take over American International Insurance (AIA) and take as much as $5.5 billion off the originally-agreed price tag.

Insiders told the Financial Times that the company is hoping to get the current $35.5 billion price down to $30 billion to help ensure shareholders vote in favour of the acquisition of AIA, which is an Asian subsidiary of American International Group (AIG).

A statement for Prudential did not confirm whether or not talks on the price were underway.

"We would constantly have ongoing discussions with AIG on a transaction of this size," a spokesman said.

Prudential needs 75 per cent of its shareholders to back the takeover in a vote taking placing on June 7th 2010, but earlier this week a RiskMetrics report advised them to vote against the AIA purchase.

It stated that Prudential would need "very high growth rates" at AIA for a "reasonable return" on the investment.

By Asim Shah

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