Prudential to outline Asia asset sales
Monday, 17 May 2010
HONG KONG, May 16 (Reuters): Britain's Prudential Plc is expected to outline divestments of some Asian assets in its upcoming rights offering prospectus in an effort to appease shareholder concerns about its planned AIA acquisition, a source familiar with the process said Friday.
Prudential's audacious $35.5 billion takeover of American International Group Inc's Asian life insurance business hit a regulatory snag last week and delayed the release of the prospectus for the $21 billion rights issue to part fund the deal.
It was reported in March that Prudential was expected to exit some Asian markets after the completion of the American International Assurance (AIA) buy, to focus on key markets and raise at least $1 billion.
"For most countries in Asia they have still not reached a conclusion for integration plans. For some, they will probably announce on the day the prospectus is out," the source said.
Prudential declined to comment.
The decision to exit certain markets is driven by strategic business needs rather than aimed at raising money to fund the AIA purchase, the source said.
Australia, New Zealand, South Korea and Taiwan are among the four markets Prudential may decide to leave due to low market share, sources said. One source said asset sales could potentially top $1 billion.
British regulators have given in-principle approval to Prudential's purchase of AIA, sources added Thursday.
Prudential's bid to buy AIA was thrown off schedule last week when the Financial Services Authority (FSA) blocked the deal at the last minute over concern about the company's capital base.
The Times reported that Prudential planned to dispose of AIA's joint venture in India in a bid to salvage credibility for its management and convince a requisite 75 per cent of voting shareholders to back its plans.
Prudential's audacious $35.5 billion takeover of American International Group Inc's Asian life insurance business hit a regulatory snag last week and delayed the release of the prospectus for the $21 billion rights issue to part fund the deal.
It was reported in March that Prudential was expected to exit some Asian markets after the completion of the American International Assurance (AIA) buy, to focus on key markets and raise at least $1 billion.
"For most countries in Asia they have still not reached a conclusion for integration plans. For some, they will probably announce on the day the prospectus is out," the source said.
Prudential declined to comment.
The decision to exit certain markets is driven by strategic business needs rather than aimed at raising money to fund the AIA purchase, the source said.
Australia, New Zealand, South Korea and Taiwan are among the four markets Prudential may decide to leave due to low market share, sources said. One source said asset sales could potentially top $1 billion.
British regulators have given in-principle approval to Prudential's purchase of AIA, sources added Thursday.
Prudential's bid to buy AIA was thrown off schedule last week when the Financial Services Authority (FSA) blocked the deal at the last minute over concern about the company's capital base.
The Times reported that Prudential planned to dispose of AIA's joint venture in India in a bid to salvage credibility for its management and convince a requisite 75 per cent of voting shareholders to back its plans.