AIG said Tuesday it won't accept lower Prudential offer for AIA

The Star Malaysia    Published: Tuesday June 1, 2010 MYT 2:52:00 PM

BANGKOK: U.S. insurer AIG said Tuesday it won't accept a lower offer for its Asian insurance business from Prudential, potentially scuttling the multibillion dollar deal.

London Stock Exchange-listed Prudential PLC was trying to lower the $35.5 billion price agreed for the purchase of AIA, which is the Asian insurance business of American International Group Inc.

"After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential," AIG said in a statement.

"The company will not consider revisions to those terms."

The deal has faced resistance from Prudential shareholders, who believed the price was too high.

Prudential needs to line up support from holders of 75 percent of its shares by June 7.

If the AIA deal falls through, Prudential will owe AIG a termination fee of $230.6 million

Opponents of the deal have formed a Prudential Action Group, which is seeking to muster support for a vote of no confidence in the Prudential's chief executive Tidjane Thiam.

The group claims that at least 15 percent of shareholders intend to vote against the deal.

AIG, which received more than $180 billion in aid from the U.S. government during the financial crisis, hoped to raise a total $51 billion from the Prudential deal and the sale of its American Life Insurance Co. division to MetLife Inc. - AP