WASHINGTON BUREAU — Prudential P.L.C. may walk away from efforts to acquire American International Assurance Company from American International Group Inc.

Prudential, London, has been trying reduce the price it is paying for AIA to $30.4 billion, from $35.5 billion, and AIG, New York (NYSE:AIG), says it will insist on sticking with the original price.

“After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential,” AIG says in a statement. “The company will not consider revisions to those terms.”

The board of the U.K. Prudential, which has no connection with Prudential Financial Inc., Newark, N.J. (NYSE:PRU), is “considering its position,” the U.K. Prudential says.

In addition to seeking a reduction in the deal price, Prudential has been trying to reduce the amount of cash it would pay to $23 billion, from $25 billion. Prudential wants to use stock and other securities to pay the rest of the deal price.

If Prudential breaks off talks with AIG, it may have to pay AIG a 153 million pound breakup fee. The breakup fee would have a value of about $230 million at current exchange rates.

Securities analysts say AIG Chief Executive Robert Benmosche has already been thinking about selling AIA to the public, and James Millstein, the Treasury Department’s chief restructuring officer, raised the possibility last week at a Troubled Asset Relief Program Congressional Oversight Panel hearing.

AIA has operations in Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Singapore, South Korea, Thailand and Vietnam.

AIA now controls two companies — the Philam Group of Companies of the Philippines and ALICO Taiwan – that previously were part of AIG’s American Life Insurance Company group.

AIG is selling Alico to MetLife Inc., New York (NYSE:MET), for about $15.5 billion in cash and stock.

The U.K. Prudential has reduced its offer for AIA because its shareholders have been balking at the idea of paying the higher price, according to Clifford Gallant, a securities analyst at Keefe, Bruyette and Woods, New York.

AIG rejected the offer, after consulting with the U.S. Treasury and the Federal Reserve Board, “either because they think it is too low a price or, even at that price the deal might not get done,” Gallant says.

AIG has used large stakes in AIA and Alico as collateral for the $29.8 billion Federal Reserve Bank of New York credit facility that now finances AIG’s operations.

The price of AIG shares soared from a 52-week low of about $8 in the summer to a high of about $56 in the fall, and the price has settled into a range of about $35 to $45 per share since March.

Gallant testified at the oversight panel hearing that he thought AIG was “grossly overvalued.”

The price of the stock fell 2.2% today to $34.60.

The shares will be worth about $6 each once the government is paid off, Gallant predicts.