JSM Financial: Prudential asks AIG for a 10% price drop to save AIA deal.

May 31, 2010 - PRLog -- JSM Financial has learned that the embattled Chief Executive of British insurance giant prudential, Tidjane Thiam, is to hold emergency talks with the company’s UK-based shareholders in the hopes of saving its audacious takeover bid of AIG’s Asian life insurance arm.

Reports indicate that Prudential’s chief shareholder, controlling a 13% stake, will vote in favor of the takeover if the purchase price drops to between $31 billion and $32 billion, with other investors also prepared to back a revised deal.

Prudential was recently forced to reopen price talks with AIG after facing increasing pressure from its shareholders who held concerns that the acquisition price was too high and that profit estimates were too optimistic, as previously reported by JSM Financial.
Prudential requires a 75% approval of the deal by share holders at the June 7 shareholder meeting.

CEO Tidjane Thiam has been in weekend talks with AIG in the U.S. in an attempt to resolve the price issue.

Sources close to the matter have indicated that if these negotiations are successful the new price is likely to be between $30 billion and $32 billion.


JSM Financial has been informed that another option being considered is an earn-out, where future payments to AIG would increase if the merged business met its performance targets.

At the height of the global economic crisis AIG received a $182 .3 billion bailout which the U.S. treasury is keen to recover in part by the sale of AIA.

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