AIG/Prudential Deal Falls Through

Submitted by Chris Gaetano on Wed, 06/02/2010 - 10:37

An agreement that would have sold American International Group’s (AIG) Asian life insurance wing to British financial services firm Prudential has fallen through today over last minutes change in the terms of the deal. AIG, a company that has become synonymous with the financial crisis and its consequent government rescue packages, was originally scheduled to sell one of its assets, American International Assurance (AIA), to Prudential for $35 billion. Shortly after the deal was announced, however, shareholders balked at the deal’s price tag as well as the $20 billion cash Prudential was asking them to pay to complete the deal. This prompted the British firm to, at the last minute, lower its offer to $30.37 billion, a sum that AIG, in a statement, said it would not accept. Now that the plan has fallen through, AIG plans to make an initial public stock offering on AIA in Hong Kong.

The deal, had it gone through, would have netted the federal government at least $16 billion. AIG, since being rescued by the during the height of the financial crisis, owes the government about $70 billion.

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