Prudential has dropped its lawsuit against American International Group (AIG) and has pocketed a $600m (£423m) termination fee as the result of its failed bid to take over American General.
A spokesman said that although Prudential was disappointed at the outcome of the American General deal the company would not make any knee jerk reaction to the failed takeover bid. Prudential's dropping of the lawsuit against AIG was a requirement for the company to receive the termination fee, according to the spokesman.
The $23bn (£16.2bn) AIG deal that was finalised last week will see American General shareholders receive $46 per share in AIG common stock. The deal, which has been approved by the boards of directors of both companies, will be a tax-free reorganisation and will be treated as a pooling of interests for accounting purposes.
The deal is subject to various regulatory approvals, as well as the approval of American General shareholders. AIG expects the transaction to be completed by the end of the year.
M R Greenberg, AIG’s chairman and chief executive, said: The acquisition of American General will significantly strengthen our position in the domestic life insurance market. American General's businesses will complement AIG's existing retirement savings business, giving us an even stronger platform from which to capitalise on the significant growth we see in retirement savings in the years ahead.”
He added: We are very pleased we could reach an amicable solution with Prudential.
By Geoffrey Ho
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