More analysts warn on Pru s $35.5 billion AIA deal

HONG KONG: A chorus of opposition is growing against Prudential Plc s bold $35.5 billion takeover of American International Assurance (AIA), with analysts from Singapore to London flagging risks to the deal just weeks ahead of the critical shareholder vote.

Many analysts have questioned Prudential s revenue synergy targets, with some describing them as unrealistic. Last week, a Singapore-based consultant said Prudential and AIA s agency forces showed similar levels, throwing into doubt the synergies projected by Prudential.

The latest to raise concern is shareholder RiskMetrics Group Inc, which asked investors to vote against the deal, although it said that, based on deal and trading multiples, it believed Prudential was paying a fair price for AIA

Prudential, which is asking shareholders for $21 billion through a rights offer to part-fund the acquisition, is facing some opposition to its takeover of American International Group Inc s Asian life insurance business.

Investors are questioning the price Prudential wants to pay to transform itself into an insurance behemoth in Asia.

CLSA Asia Pacific Markets, one of the brokers not involved with deal, said in a report last week that Prudential s projected revenue targets and agent productivity gains appeared unrealistic.

"We see no revenue synergy should the two brands coexist and remain in competition. It is already a challenge to retain agents, let alone target a dramatic increase in sales," CLSA said.

Risk advisory firm RiskMetrics issued a critical assessment of the takeover bid, saying Prudential was paying a high price for the company, which recorded a post-tax operating profit of $1.6 billion for 2009.

"A full price, integration risks and ambitious targets that barely meet the cost of capital do not make a compelling combination," the report said.