US Treasury: haven’t considered any other AIA deal

* Pru wants to reduce price to about $30 billion -source

* $5 bln cut ‘would get more people on side’ -investor

* Prudential shares down 1.1 percent in London

* AIG shares close down 3 percent in New York

NEW YORK/LONDON, May 29 (BestGrowthStock) – The future of
Prudential’s (PRU.L: ) deal to buy AIG’s (AIG.N: ) Asian life
insurance arm remained uncertain on Saturday, with the U.S.
Treasury saying it has not considered any other deal than the
existing contract on the table.

American International Group Inc was bailed out with a
$182.3 billion U.S. aid package and has been selling assets to
pay back the debt.

It agreed a massive deal earlier this year to sell its
Asian life insurance unit, AIA, to Prudential, but in recent
days Prudential has entered talks to cut the $35.5 billion
price tag in a last-ditch bid to salvage a deal criticized by
its shareholders as too expensive, sources previously said.

The UK’s biggest insurer wants to cut the price to about
$30 billion, a reduction of 15 percent, one source close to the
deal, who asked not to be named, previously told Reuters.

AIG feels that $30 billion for AIA is too low and is not in
a rush to do a deal, another source familiar with the matter
said late on Friday.

AIG believes it has many options for AIA, as it views AIA
as a “valuable property” and does not want to sacrifice value,
the source said.

An AIG spokesman was not immediately available for comment.

TAKE A LOOK on Prudential/AIA on: [ID:nLDE64G0HM]

Reuters Breakingviews column on: [ID:nLDE64R0RK]

Options such as an IPO for AIA may not be so attractive in
the current volatile equity market. The insurance giant could,
however, try to find other partners for a deal.

The U.S. Treasury Department, which bailed out American
International Group Inc in 2008, said in a statement released
late on Friday that it has not looked at any alternative

“Treasury has not considered any alternative other than the
existing contract,” Treasury spokesman Andrew Williams said.
“We believe AIA is a valuable business for which there is
significant interest.”

The clock is ticking for Prudential, which faces a
shareholder vote on the deal in little over a week, meaning
negotiations are likely to intensify in the coming days.


The future of Prudential Chief Executive Tidjane Thiam
hinges on the success of his bid for American International
Assurance (AIA) launched by the former Ivory Coast government
minister in March after less than a year in the top job.

“Discussions regarding the current status of the
transaction have taken place between Prudential and AIG and are
continuing,” Prudential said in a statement on Friday.

“These discussions may or may not lead to a change in the
terms of the combination,” it said.

A collapse of the deal would also be bad news for Robert
Benmosche, the head of AIG, which is operating with $132
billion in government support and under pressure to return the
money to taxpayers.

The new price negotiations come amid fears the deal, to be
funded in part by a record $21 billion rights issue, could fall
short of the required 75 percent approval in a June 7
shareholder vote.

“The only way that the Pru is going to get a yes vote at
the (meeting) is if they manage to get a price cut. In its
current form, I am almost certain the vote will fail,” one
Prudential shareholder told Reuters, requesting anonymity.

A $5 billion price cut “would certainly get more people on
side. We would certainly revisit our view,” the investor said.

Olivetree Securities strategist James Chappell estimated
that cutting the price to below $31 billion would give the deal
a greater than 50 percent chance of going ahead, compared with
about 20 percent now.

“Prudential will still need to rebuild relationships with
investors and reassure that they can execute on the
acquisition,” he said.

A large majority of 72 percent said Prudential was paying
too much in a Reuters poll of 23 shareholders and analysts on
Thursday, while half of the shareholders polled said they
expected the company to lose the June 7 ballot.

Investment Advice

(Reporting by Megan Davies, Ilaina Jonas, Paritosh Bansal,
David Lawder, Jimmy Tsim, Vikram Subhedar; Editing by Eric

US Treasury: haven’t considered any other AIA deal