articel from Hong Kong--kelvin

AIA shelves listing as Prudential seals $276b takeover

Mandy Lo

Tuesday, March 02, 2010

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American International Assurance has shelved its flotation in Hong Kong after attracting a buyer.

British insurer Prudential has agreed to take over AIG's Asian life insurance arm for US$35.5 billion (HK$276.9 billion).

The post-merger unit will seek to dual-list in the SAR after the transaction is complete by the third quarter earliest.

"This transaction is hugely exciting and a one-off opportunity to transform the group," said Prudential chief executive Tidjane Thiam. "Aside from the transaction, it is our intent in due course to seek a dual primary-listing on the Hong Kong Stock Exchange to enable our customers and investor base to share in this value creating opportunity."

Hong Kong Exchanges and Clearing (0388) chairman Ronald Arculli said it was a "pity" to lose the large IPO deal - AIA had aimed to raise up to US$20 billion in the city. He said it will be possible for AIA's new owner to trade it publicly.

Prudential's London-listed shares declined 13 percent yesterday after a short suspension pending the announcement.

Announcing the merger yesterday, Prudential said the move aimed "to capture the future growth opportunity in Asia."

It will pay AIG a total consideration of US$35.5 billion made up of US$25 billion in cash and US$10.5 billion in new Prudential shares and other securities.

This is 1.69 times AIA's embedded value and 25.4 times its new-business profit in 2009. The price-to-earnings multiple of the deal excluding cost of synergies is 24.7 times.

The British firm said the integration cost of the two insurers is expected to be US$340 million, the same amount as saved after cutting regional offices and management-related expenses.

The rights issue and transaction are subject to approval from Prudential shareholders in May.

Reference:
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=95192&sid=27251990&con_type=1