WASHINGTON BUREAU — Prudential P.L.C. has withdrawn its offer for American International Assurance, and analysts say American International Group Inc. (NYSE:AIG) likely will try to sell AIA through an initial public offering.
Shareholders of Prudential, London (NYSE:PUK), have been pressing the company to drop the offer or renegotiate the deal, because of a belief that Prudential got a bad deal when it agreed in March to pay $35.5 billion in cash and securities for AIA, a large Asian life insurer.
Prudential has been trying to cut the total price to $30.4 billion, and the amount of cash to be paid up front to $23 billion, from $25 billion.
“Unfortunately, it has not been possible to reach agreement so we feel it is in the best interest of our shareholders not to pursue this opportunity,” Prudential Chairman Harvey McGrath says in a statement. “We are therefore withdrawing from the transaction.”
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The U.K. Prudential has no connection to Prudential Financial Inc., Newark, N.J. (NYSE:PRU).
AIG Chief Executive Robert Benmosche earlier sent a letter about the AIA deal to AIA employees.
“Because of the progress AIG has made in the last several months, we will have several options to consider regarding AIA – more than we did in March,” Benmosche says in the letter.