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F&C joins rebellion against Pru deal

PRUDENTIAL investor F&C Asset Management has joined the rebellion against the insurer's plans to buy AIA.

The £100bn management house has told Prudential it will vote against the $35bn (£24.6bn) bid for AIG’s Asian arm at the crucial shareholder meeting on 7 June.

In a statement F&C said it did not object to Prudential’s strategy to expand in Asia but said it had concerns with "the economics" of the huge cash and equity deal.

Head of UK equities at F&C Peter Lees said: 'We are not concerned about the group’s capital position, which we accept would likely improve on the back of the disposals which have been announced.

“We do however feel that the transaction involves very significant execution risk, given its sheer scale and complexity. In our view these risks, when set against the current price of the transaction, leave virtually no margin for error in the delivery of revenues and cost synergies.”

Other investors that are known to be at least sceptical about the deal include BlackRock, Legal & General, Schroders and Standard Life.

The board needs 75 per cent of shareholders to back the deal or it fails.

Meanwhile Prudential has suspended trading of its Hong Kong-listed shares as it confirmed it is in talks to renegotiate the terms of the acquisition.

The suspension comes three days after the UK insurer's shares launched on the Asian markets.

The amount being paid is now under further scrutiny after the shareholder rebellion.