Prudential announces rights issue to fund prospective acquisition
Prudential has launched the UK's biggest rights issue as it looks to raise mergers and acquisitions funding.
Prudential has moved a step closer to completing a planned
acquisition of the Asian arm of the AIG Group by launching a rights
issue aimed at raising the funds needed for the deal.
Following on from the news that the Financial Services Authority
(FSA) has given the green light to the planned acquisition, the
insurer has announced that it is to offer its shareholders the
chance to buy more shares at 104 pence each.
This represents a 40 per cent discount on the closing prices of
the day of the rights issue.
It is anticipated that the initiative, which also represents the
largest-ever rights issue in the UK, will help raise £14.5 billion
in cash and potentially boost shareholder support for the deal
ahead of negotiations and a vote in June.
Launching the prospectus for the rights issue, Prudential chief
executive Tidjane Thiam stated his optimism that the merger with
AIG's Asia business will go-ahead.
"The combined business will be a fast growing and highly
profitable company, with a leading position in many of the most
attractive markets in the world," he noted.
Meanwhile, the London Evening Standard has reported that
underwriters in the City will be among those benefitting from a
£500 million "fees bonanza" should the merger go ahead as