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AIA turn down discounted acquisition offer from Prudential

Negotiations over Prudential's planned acquisition of AIA look set to continue.

01 June 2010

Prudential will have to step up its offer for AIA if its planned acquisition is to have any chance of success, it has been suggested.

The insurance giant has, over the past couple of weeks, been working to negotiate a lower price for the Asian arm of the US insurer AIG, with a price of $30 billion having been mooted.

This price was expected to sit well with Prudential's shareholders, many of whom are opposed to the planned acquisition.

However, AIG has stated that it will not consider any revisions to the deal proposed towards the start of the year, which valued the company at $35.5 billion.

A statement released by AIG read: "After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential."

The development has split economic observers, with Panmure Gordon analyst Barrie Cornes telling Channel 4 News that, unless AIG changes its mind and acquiesces to a reduced price, the deal is unlikely to go ahead as Prudential will fail to achieve the shareholder support it needs.

On the back of the news, shares in Prudential increased in value by four per cent.

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