Prudential in fresh AIA takeover talks

Prudential chairman Harvey McGrath (L) and Ronald Arculli, chairman of the Hong Kong Exchange Prudential's chairman celebrated the firm's Hong Kong listing earlier this week

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Prudential has confirmed it is in talks to renegotiate its deal to take over AIG's Asian business AIA.

The UK insurer announced its plans to take over AIA for £24.6bn ($35.5bn) earlier this year, but has since faced a backlash from shareholders.

It is now believed to be seeking a lower price for the deal, in order to appease investors who think it is paying too much.

The Pru has called the deal a "one-off" opportunity to access the Asian market.

There is widespread speculation that the insurer could eventually quit the UK and US altogether should the acquisition of AIA go ahead, focusing entirely on the fast-growing Asian insurance markets.

Prudential said that discussions with AIG about the current status of the deal had taken place and were continuing.

"These discussions may or may not lead to a change in the terms of the combination of AIA and Prudential," the insurer said in a short statement.

There is speculation that Prudential is looking to cut the price of the deal by about £3.5bn.

Earlier this month, Prudential announced plans to raise £14.5bn from shareholders to fund the acquisition of AIA - the UK's biggest rights issue to date.

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In London, Prudential shares fell at the beginning of trading on Friday.

Robin Geffen, managing director of Neptune Investment Management, has been among the most vocal Prudential shareholders to object to the deal.

"In this case, there's one desperate buyer paying an extraordinarily high price for AIA," he said.

"Those who have some sympathy [for the deal] say it's a one-off opportunity for Asian growth - that is completely wrong."

But insurance analyst Toby Langley from Sanford Bernstein said cutting the price of the takeover might help to win over other investors.

"The management team still have a lot to do before the shareholders vote on the deal on 7 June, but the vote still remains winnable," he said.

"[Cutting the price] will go a long way towards [winning it]. This is an attractive deal - it could be made even more so."

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