AIG Rejects PUK’s Move To Cut Offer Price For AIA By More Than $5 Billion

According

, Prudential Plc

has met with a refusal in its endeavor to reduce the acquisition price of the Asian unit AIA of American International Group

by more than $5 billion from the agreed upon price. AIG today rejected the revised $30.375 billion cash and shares offer from the British life assurer, giving vent to a rumor that the deal is on the verge of failure. According to the March 1 sale agreement of the two entities, PRU had agreed to pay $35.5 billion for AIA. PUK was, however, now trying to renegotiate this price as it feared that its shareholders will block the deal. Broker Panmure Gordon says, “Unless AIG have a change of mind, we believe that the deal will collapse as PUK will be unable to garner sufficient support to proceed with the acquisition.” AIG disclosed in a statement that it has taken the decision to stick with the original deal “after careful consideration” and that revisions would not be considered any longer. In response, PRU said that it was considering its options and would make further announcement when it is appropriate. Both the sides are stuck in talks since last Friday, when PRU maintained that it would not be able to garner enough shareholder support for the deal at a special meeting next Monday at the agreed upon price. Earlier on, chief executive of PUK, Tidjane Thiam, had strongly voiced the strategic rationale behind the deal and now if the company withdraws the takeover bid, the shareholders are likely to question his future leadership. PUK slipped 1.91% to $56.61 in the pre-market session. Read more