American International Group said it would not consider revising the terms of a deal for its Asian life insurance unit with British insurer Prudential Plc, in a move that threatens to derail the industry’s largest ever transaction.
Separately, Prudential said in a statement it had offered to cut the deal’s value to $30.38 billion — offering $23 billion in cash and about 2.16 billion new Prudential shares. It noted AIG’s announcement and said it was considering its position.
Prudential and American International Group Inc reopened negotiations last week to salvage the deal for Hong Kong-based AIA after many shareholders said Prudential was overpaying in its move to become Asia’s dominant insurer.
Prudential was seeking $21 billion from investors to partly fund the transaction, the biggest-ever rights offer by a British company. Shareholders are due to vote on the deal on June 7.
A collapse of the deal would be a blow to AIG boss Robert Benmosche, who wants to repay part of the $132 billion bailout the U.S. insurer received in 2008 to stay in business.
It would also put Prudential CEO Tidjane Thiam in a tough position as he had championed the AIA deal, the insurance sector’s biggest-ever takeover, arguing it gave the 162-year-old British insurer a rare opportunity for a commanding presence in fast-growth Asia.
“It’s going to be hard for Prudential to gather support for the vote they need, after having gone out saying they are renegotiating and failed to do so,” said one source familiar with the transaction.
(Editing by Chris Lewis and Ian Geoghegan)
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