British insurer Prudential PLC said yesterday it would buy the Asian unit of US insurance company AIG in a deal worth US$35.5 billion.
Prudential will pay US$25 billion in cash, including US$20 billion from a rights issue, and US$10.5 billion in new shares and other securities to acquire AIA Group Ltd.
The combined group will be the leading life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines, with the leading foreign life insurance business in China and India, Prudential said.
Prudential said it expected to complete the acquisition in the third quarter, subject to approval from regulators and shareholders.
“This transaction is hugely exciting and a one-off opportunity to transform the group,” Prudential CEO Tidjane Thiam said.
“Asia has been very clearly a major driver of value for Prudential for several years and in 2009 it accounted for 44 percent of new business profit [post-tax],” he said. “The combined group would have 60 percent of 2009 new business profit coming from Asia and puts us in a strong leadership position in all the critical growth markets in the region.”
AIG was bailed out in September 2008 by the US government as the financial crisis worsened. The insurer has received aid packages with a total value of US$182.5 billion from the government.
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