Troubled US insurer American International Group, which agreed to sell its Asian life insurance unit AIA to Prudential for $35.5 billion, benefited a lot for showing patience.
Earlier in 2008 also, AIG had put AIA for auction, but it rolled back its plans and decided to wait because it failed to find any suitable buyer as markets were down due to economic slump.
At that time AIG was getting nearly half of what Prudential is paying now for its Asian business.
Prudential will pay $25 billion in cash, while $2 billion and $8.5 billion in preferred shares and stock & equity-linked securities respectively. Prudential has plans to go for $20 billion share sale to finance the deal.
Prudential is getting advice from J. P. Morgan Chase & Co, Credit Suisse Group, HSBC and Lazard Ltd., while The Blackstone Group, Goldman Sachs, and Citigroup Inc. are offering advice to AIG on the deal.
AIG is selling some of its assets to raise funds to repay $182.3 billion in taxpayers’ money, which it received at the peak of economic slump crisis in 2008.
Shares in AIG gained 4.1 per cent to $25.78-a-share, while Prudential's shares slipped 12 per cent to 530 pence-a-share on Monday.