Prudential withdraws Asian bid
UK insurer Prudential abandoned its plan to buy AIG’s Asian life unit for $35.5bn (€28.7) yesterday, leaving management under fire and the company facing a £450m bill for failure.
Prudential’s move to drop out was widely expected after bailed-out US giant American International Group refused to cut the price, turning down a last-ditch effort by Britain’s largest insurer to appease shareholder concerns.
“We listened carefully to shareholders over the price, and initiated a renegotiation of the terms with AIG. Unfortunately, it has not been possible to reach agreement,” Prudential chairman Harvey McGrath said in a statement. “We are therefore withdrawing from the transaction.”
For AIG, the collapse of the sale means it must weigh up its options, including a potential return to a plan to float off American International Assurance.
For Prudential, the end of the botched takeover effort leaves its own strategy open to question, and its management open to criticism, with chief executive Tidjane Thiam and McGrath seen as having personally led the plan that would have made it Asia's largest foreign-owned insurer.
Prudential's retreat will mean it has avoided the risk of an embarrassing and virtually unprecedented public defeat at the hands of shareholders, who were due to vote next Monday on the deal and its funding.