Pru gets an earful over AIA deal
RiskMetrics has weighed in against Pru buying AIGâ€™s AIA Asian assets, saying $35.5 billion is too much. The risk advisory firm joins a chorus of analysts chirping away from Singapore to London about problems with a deal that would pay off a huge chunk of AIGâ€™s debt to Uncle Sam while transforming Pru intoÂ an Asian powerhouse.
Prudential holds a shareholders vote on June 7 to clear a $21 billion rights offer to fund the acquisition.Â One bigÂ issue is the price tag, which hasÂ drawn scrutiny given the fact that AIG has limited leverageÂ to demand a big premiumÂ since it is selling the assets under duress. Pruâ€™s ability to hit its projected revenue â€śsynergiesâ€ť from the deal are a big concern too.
CLSA Asia Pacific Markets, a broker not involved with deal, said in a report last week that a plan keeping both AIA and Pru brands intact and competing with each other will negate such gains. “It is already a challenge to retain agents, let alone target a dramatic increase in sales,” CLSA said.
The view of RiskMetrics, which itself was bought only a couple of months ago, could help to unravel a big deal just when the falling market looks set to start pulling the rug out from under the M&A market.