PRUDENTIAL was last night trying to lower the $35.5bn price tag of its planned purchase of the Asian assets of American International Group in a list ditch attempt to avoid a “no” vote on the deal.
The UK life insurer is hoping it can reduce the price to $30bn, it is understood, amid rising investor pressure to scrap the deal. Pru chief executive Tidjane Thiam, who has been wooing American investors, is directly involved in the talks.
The negotiations come after a rebellious shareholder claimed 20 per cent of investors were prepared to vote the deal down.
Robin Geffen of Neptune Investment Management, which owns £50m of Prudential stock, said investors representing a fifth of the insurer’s market capitalisation would try to block its $35.5bn (£25bn) takeover of AIG’s Far Eastern arm. Prudential needs to secure the backing of 75 per cent of shareholders for the acquisition, which will be part-funded with a $21bn rights issue, at a vote on 7 June.
Geffen said: “This deal is very expensively priced; shareholders are being asked to pay $35.5bn for a company generating $1.6bn of profit.”
Shares in Prudential soared 6.8 per cent to 547.5p amid morning speculation Thiam was on the brink of calling the deal off.
One top-20 shareholder who favours the tie-up said he could understand short-term jitters among investors following a series of management errors. Although he intended to vote for the acquisition, the shareholder said a “no” vote would not be a disaster as Prudential shares would rally.
Another top-20 investor who is undecided how to vote said the price tag attached to AIA was too high. Prudential would not be able to renegotiate terms with the US government, which owns 83 per cent of AIG, he said.
Prudential declined to comment