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Prudential presses ahead with record £14.5bn cash call

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by Kay Mitchell

Prudential, which is Britain’s second largest insurer, has today outlined details of its £14.5 billion ($21 billion) rights issue, which will be used to help fund its acquisition of AIA, the Asian arm of US company American International Group (AIG).

Earlier this month, fears were raised over the acquisition after the Financial Services Authority (FSA) intervened causing a delay to the rights issue.

The FSA said the deal could leave the newly-merged company with insufficient capital, however, the concerns appear to have been resolved.

The rights issue, which is the largest in British corporate history, is priced at 104p, heavily discounted on Friday’s closing price of 542½p

Pru’s chairman, Harvey McGrath, called the proposed deal “a unique opportunity”.

Should the deal receive shareholder approval, the acquisition of AIA will see Pru’s business more than double in size.

It will also make the Pru the biggest insurer in Asia, and the largest life assurer outside China.

Prudential’s chief executive, Tidjane Thiam, comments: “The combined business will be a fast growing and highly profitable company, with a leading position in many of the most attractive markets in the world.”

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News posted: May 17, 2010

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