the biggest bargain in Asia
London, UK (PRWEB) March 12, 2010
A difference of opinion between investors erupted in Europe and Asia on Monday over British insurer Prudential's $35 billion deal to buy AIG's Asian unit, American International Assurance (AIA), reports shareprices.com, a free online resource providing share information on all FTSE 100, 250 and 350 London Stock Exchange listed companies.
Prudential's share prices plunged to 487.5p at the beginning of last week subsequent to the news of the AIA acquisition was announced, but managed to recovered towards the end of the week to close at 520p. Despite the slight recovery, the closing figure still represented a fall of nearly 20% from the January peak when is stocks were trading at 645.5p.
The partial recovery was largely due to buying in Asia, where the Shanghai Securities Daily described the AIA deal as "the biggest bargain in Asia". Indeed, Prudential plans to tap into demand by bringing forward its listing on the Hong Kong Stock Exchange, which it wants effective before its $20 billion right issue. In total, Prudential will pay $25 billion in cash, $8.5 billion in equity and equity-linked securities and $2 billion in preferred stock for AIA.
The size of the rights issue and concerns that Prudential was over paying for AIA were the original causal factors that forced the share price down last week and as a counter measure, Prudential has already launched a "roadshow" to explain the deal to investors in more detail.
However, reports have since suggested that UK shareholders were incensed after discovering that they had been excluded from sub-underwriting Prudential's right issue, with the job been given to 30 banks and sovereign wealth funds - who will receive lucrative fees - instead, according to underwriters Credit Suisse, HSBC, JP Morgan. Furthermore, top institutional investors were threatening a revolt against Prudential Chief Executive, Tidjane Thiam, as a result of the exclusion.
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