Sunday, July 25, 2010

Prudential shares tumble on $35.5 billion Middle East deal

Robert Lindsay, Miles Costello & , : {}

Shares in Prudential plunged currently after Britains second-largest insurer summarized plans to buy American International Group"s Asian commercial operation for $35.5 billion (�23.6 billion), saved by the countrys largest-ever money call.

Prudential will lift �14 billion, together with fees, by a entirely underwritten rights issue to assistance to compensate for AIA.

The rights issue will be the greatest in British corporate history. It follows a �13.5 billion capital-raising by Lloyds Banking Group last Nov and a �12.5 billion rights issue by HSBC the prior March.

The scale of appropriation indispensable to financial the understanding weakened investors, who sent the shares down 12.2 per cent, or 73.5p, to 529p in afternoon trading.

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Last year, AIG was looking about $20 billion for the Asian assets, far next the $35.5 billion that Prudential is charity today.

Tidjane Thiam, the arch senior manager of Prudential given last September, pronounced that word association valuations had increasing given afterwards and the understanding includes the Philippines, that the progressing due sale did not.

He said: "What we are shopping here is an item that is really purify we are assured the numbers we are removing are reliable. A lot of work has been finished to put it in great shape."

As well as the rights issue, the Pru will additionally steal $5 billion to assistance to account the takeover.

Prudential pronounced that after the merger it would find to boyant the total association in Hong Kong to one side the existent London inventory "in approval of the significance of Middle East to the total group".

The association will sojourn headquartered in the UK and the existent house will stay at the helm.

The Pru"s $35.5 billion remuneration to AIG will be finished up of $25 billion in money and $10.5 billion in new Prudential shares.

The US Government owns 80 per cent of AIG after a $182 billion taxpayer-funded bailout and will effectively own a interest in Prudential after the deal.

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