Prudential looks to expand brand in Asia through AIA acquisition

Prudential, the British insurance firm, has confirmed it is in advanced talks to buy AIA, the Asian arm of American International Group, in a deal that would transform it into one of Asia’s biggest insurers.

The proposed deal “represents a unique and strategically compelling opportunity for Prudential,” the group said in a statement. It gave no financial details.

Prudential is expected to pay $25bn (£16bn) in cash and the balance in equity, which may be in preference shares, options or warrants. A further £15bn will be raised through a rights issue, the biggest-ever attempted by a UK company, with backing from investment banks HSBC, Credit Suisse, and JP Morgan, to support the deal.

The UK insurer already has 11 million customers in Asia. In 2008, and the comapny says the region accounted for 57% of its new business profits.

AIG currently sponsors Premier League champions Manchester United and had to be saved from collapse by the American government in September 2008. The US Treasury decided the business was too important to the country’s economy to be allowed to fail.

The company was bailed out with around £120bn of US taxpayers’ cash after racking up huge losses on toxic derivative deals.

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