British insurer Prudential confirmed it was trying to negotiate a cut in the $35.5 billion it has agreed to pay for AIG's Asian unit, amid fears its shareholders might block the deal as too expensive."We confirm that 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 of AIA Group Limited and Prudential.Reuters earlier reported that Prudential was trying to lower the price of the AIA takeover amid rising pressure from investors.Prudential is planning to finance the deal, the insurance sector's biggest ever acquisition, with a $21 billion rights issue, but some investors have said AIA's price tag is too high.In order to proceed, the deal, which would allow bailed-out AIG to repay a big chunk of its debt to the U.S. taxpayer, needs to get 75 percent approval at a shareholder vote scheduled for June 7.Any change to the price should reflect integration risks that Prudential will face, said Patricia Cheng, an analyst with CLSA."Prudential's target, to triple AIA's new business value by 2013, looks too aggressive", she said."The price can't be based on this target. But the price can't get much lower either. Investors have an idea of these integration risks and I don't think they are likely to agree to the deal.""Technically, the price can be negotiated up or down, but the question is whether there is the will to do so," said one person with knowledge of the matter, asking not to be identified as the discussions were confidential.The company hopes to get the price tag for AIA down to as low as $30 billion, the Financial Times reported, citing people familiar with the situation.Bernstein Research analyst Toby Langley said a $5 billion reduction in the price would make the deal earnings neutral to Prudential by 2013-14."A cut of $3.5 billion would see earnings dilution of 5 percent in 2013 with neutrality in 2015," he said in a note.Prudential's London listed shares rose almost 7 percent on Thursday on market talk it may call off the deal or fail to get the required 75 percent shareholder approval to get it done. Shares in Hong Kong were trading up 6.6 percent at 0649 GMT.Prudential's bold and ambitious move to transform itself into the dominant Asian insurer will be put to shareholders vote on June 7. Ahead of that, an influential voting adviser, RiskMetrics, has told investors to vote against the deal.AIG's majority owner, the U.S. Treasury, has maintained that a viable option is to return to an initial public offering plan is was pursuing before Prudential's bid.AIG had quashed that plan in favour of the Prudential deal, but there was serious misgivings about the deal among AIA staff and CEO Mark Wilson had threatened to quit if the deal had progressed, FT reported earlier this week.(Additional reporting by Jimmy Tsim and Vikram Subhedar and Myles Neligan; Writing by Doug Young, Editing by Lincoln Feast, Mike Nesbit)(For more business news on Reuters Money visit http://www.reutersmoney.in)News posted by www.newsinfoline.com
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