British insurer Prudential is terminating its deal to acquire AIA, the Asian arm of AIG, due to asking price issues.
Prudential said it was “in negotiations with American International Group, Inc (AIG) for the termination of the agreement (the SPA) for the combination of Prudential with AIA Group Limited (AIA).”
The deal has been terminated after AIG refused Prudential’s appeal to reduce the acquisition price of US$35.5 billion dollars (S$50.06 billion) to US$30 billion dollars.
Prudential is expecting the bid to be terminated, and it would pay AIG a break fee of more than 152 million pounds (S$315.9 million), in addition to the 81 million pounds legal fees.
“While AIA was an excellent opportunity, since we announced the potential transaction we have seen significant falls in the markets,” said Harvey McGrath, chairman of Prudential.
“We listened carefully to shareholders over the price and initiated a renegotiation of the terms with AIG. Unfortunately, it has not been possible to reach agreement so we feel it is in the best interest of our shareholders not to pursue this opportunity. We are therefore withdrawing from the transaction.”
The deal would have transformed Prudential into the top non-Chinese insurer by market capitalization in the world, as well as the biggest takeover in the insurance sector.