AIG/AIA and Prudential

What Prudential will still pay for AIG break-up

Jeremy Hobson Jun 7, 2010
HTML EMBED:
COPY
AIG/AIA and Prudential

What Prudential will still pay for AIG break-up

Jeremy Hobson Jun 7, 2010
HTML EMBED:
COPY

When you consider that Prudential was willing to pay more than $30 billion for AIG’s Asian Operations, $600 million may not be such a big deal, according to Kerry Berchem with law firm Akin Gump, which advises companies on mergers and acquisitions. “It’s insignificant in the totality of what the acquisition would have meant to them.”

Berchem says the price tag results from all the things that had to be done just in case the deal went through, kind of like getting ready for a wedding. “The food’s been bought, it’s been prepared, and you’ve bought the flowers and somebody else bought the flowers. You know, things are getting done in anticipation for the day.”

Except in this case, instead of flowers and cake, it’s lawyers, translators, bankers and accountants — in other words, preparing for a corporate marriage that fell through.

Then there’s the break-up fee: Prudential will pay AIG more than $200 million because it backed out of the deal.
Chalk that up to lost opportunities for AIG to shop itself around elsewhere and all the costs it had to incur just in case.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.