Prudential PLC's (NYSE ADR: PUK) much-ballyhooed buyout of American International Group Inc.'s (NYSE: AIG) Asian insurance-unit - AIA Group Ltd. may be on the rocks as the U.K. insurer's shareholders balk at the price.
The proposed buyout calls for Prudential to hand over $35.5 billion to U.S. government-owned AIG. But Prudential's biggest investors are resisting the deal because they believe the company is paying an overly rich premium for AIA, according to sources cited by the New York Post.
Additionally, the method of financing the blockbuster deal puts too much pressure on Prudential shareholders to come up with $20 billion in cash through a rights offering.
Tidjane Thiam
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Shareholder Concerns Snag Prudential's $35.5 Billion Deal For AIG's Asian Unit
Prudential-AIG Deal Another Case of Corporate Empire Building
To inattentive observers, the recent announcement that the British insurance company Prudential PLC (NYSE ADR: PUK) would pay $35.5 billion for American International Group Inc.'s (NYSE: AIG) Asian insurance operation, AIA, might seem like just another belated expansion of the old British Empire - a strange contrast to the sale of the premier British chocolate company Cadbury PLC (NYSE ADR: CBY) to Kraft Foods Inc. (NYSE: KFT) last month.
Yet in reality both deals are examples of Empire-building that for shareholders is much more dangerous than the benign British variety - Empire-building by corporate management that runs contrary to capitalist ideals.
Yet in reality both deals are examples of Empire-building that for shareholders is much more dangerous than the benign British variety - Empire-building by corporate management that runs contrary to capitalist ideals.
To read more about why the Prudential-AIG deal contradicts capitalism, click here...