| Debevoise & Plimpton LLP is advising American International Group Inc (AIG) in relation to its agreement to sell American International Assurance Group Limited (AIA), one of the one of the world’s largest pan-Asian life insurance companies, to Prudential PLC, which is being represented by Slaughter and May. The proposed deal, announced on 1 March 2010 and valued at a staggering US$35.5 billion, is comprised of approximately US$25 billion in cash and equity securities of Prudential worth approximately US$10.5 billion in face value. The deal, which would see Prudential and AIA combine, would be effected through the acquisition of both those companies by a new company – headquartered and incorporated in the UK – that will assume the name Prudential PLC and be traded on the main market of the London Stock Exchange. In recognition of the importance of Asia the new company will seek a dual primary-listing on the Hong Kong Stock Exchange.
The cash component of the consideration is to be financed through an underwritten rights issue, which has been reported as one of the biggest cash calls by a UK company. Credit Suisse, HSBC and JP Morgan Cazenove are acting as global co-ordinators and joint bookrunners and have undertaken to underwrite the rights issue – which is expected to raise US$20 billion – whilst also committing to underwrite the issuance of US$5 billion in senior debt. AIA traces its roots in the Asia Pacific region back more than 90 years, and should the deal proceed, the combined group will be the leading life insurer in Hong Kong, Singapore, Indonesia, Vietnam, Thailand and the Philippines, with a leading foreign life insurance business in China and India. Yet, as reported in the Financial Times, doubts over the feasibility of Prudential to close the deal have surfaced since details of the agreement became public: Prudential’s shares have since fallen almost 20 percent, with investors reportedly growly nervous about the stock and currency markets in the coming months. The Debevoise team is being led by partner John M. Vasily, and includes partners Andrew L. Bab and Jeremy Hill. Slaughter’s advisory team includes partners Padraig Cronin and Laurence Rudge of Hong Kong. |
