Prudentials $35 billion bid for AIA depends on Asian markets

Myles Neligan and Michael Flaherty LONDON/HONG KONG Sun February 28, 2010 10:47am EST Related News UK"s Prudential negotiates $35.5 billion understanding for AIG unitSun, February twenty-eight 2010UK"s Prudential negotiates $35.5 bln understanding for AIG unitSat, February twenty-seven 2010Britain"s Prudential in talks to buy AIA: sourcesSat, February twenty-seven 2010Mega IPO of AIG"s AIA section faces headwindsFri, February nineteen 2010DEALTALK-Mega IPO of AIG"s AIA section faces headwindsFri, February nineteen 2010

The trademark of British hold up insurer Prudential is seen on their building, in London Oct 21, 2008.

Credit: Reuters/Stephen Hird

LONDON/HONG KONG (Reuters) - Prudential"s bid to buy American International Group"s Asian hold up section is a gamble opposite Asian batch markets as descending share prices opposite the segment would have the pick of inventory the commercial operation in Hong Kong less attractive.

Deals

Prudential has been in on-again, off-again talks to buy the unit, American International Assurance (AIA), given early last year, with discussions resuming in late 2009, a source concerned in the understanding pronounced on Sunday.

AIA embarked on the programmed Hong Kong IPO last year, when the city"s batch sell was in the surrounded by of the world"s largest bang in primary open offerings as Asian markets surged in the second half of 2009, a little as majority 100 percent.

But so far this year, Asian markets have fallen, boring down Hong Kong"s IPO market, and opening the doorway for a customer to swoop on a commercial operation seen as AIG"s climax jewel.

"AIG is watchful for the markets, really," the source said, referring to the preference AIA"s primogenitor association faces: Sell AIA shares on Hong Kong"s sell should the marketplace hold up, or sell the complete association to a vital customer if it continues to drop.

The Hong Kong batch sell is approaching to examination AIA"s IPO focus in late March. The approaching capitulation would transparent the approach for the charity to take place in Apr or May.

AIG is approaching to aspire to yes or no choice raises the majority cash, with the deduction earmarked toward repaying a $182.3 billion supervision bailout the association perceived dual years ago.

ASIA AMBITIONS

A takeover of AIA by Prudential would have the association the greatest unfamiliar insurer in Middle East by far, serve augmenting the seductiveness to investors looking bearing to one of the world"s fastest-growing monetary services markets.

"I think what it could do is eventually put an finish to the diagnosis of Prudential as a UK hold up company," pronounced Sanford C. Bernstein researcher Toby Langley.

"I think that"s something that"s dragged on the batch for utterly a little time."

Buying AIA would enlarge the suit of Prudential"s increase generated in Middle East to in between dual thirds and 3 quarters, from about half currently, Langley said.

The mooted understanding with Prudential is value about $35.5 billion, and the British insurer could financial the merger by arising new shares, sources told Reuters on Saturday.

Prudential has additionally hold talks over offered the UK commercial operation to British insurance-focused takeover car Resolution if the AIA understanding goes ahead, the Sundayjournal reported.

Prudential and Resolution both declined to comment.

Prudential has formerly played down suggestions it competence sell the UK unit, arguing that the commercial operation generates money that can be reinvested in the faster-growing Asian and U.S. markets.

Analysts reckon Prudential"s seductiveness in AIA could prompt opposition approaches, with Canada"s Manulife Financial or France"s Axa both seen as potentially meddlesome since of their ambitions to grow in Asia.

Deals for acne doctors to help adolescents to treat their acne