Pru gets South Korea anti-trust nod for AIA deal: FTC

HONG KONG/SEOUL Thu Apr 29, 2010 6:39am EDT

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HONG KONG/SEOUL (Reuters) - Britain's Prudential Plc (PRU.L) has secured South Korean anti-trust approval for its planned $35.5 billion takeover of American International Group Inc's (AIG.N) Asian life insurance business, a Korean Fair Trade Commission (FTC) official said. told Reuters on Thursday.

The approval brings the British insurer a step closer to receiving full regulatory clearance in Asia to proceed with its bold and ambitious plan to become a dominant Asian insurer.

Prudential is in discussions with regulators in Vietnam to address anti-trust issues with its acquisition of American International Assurance (AIA), a source familiar with the deal said. Vietnam has yet to make a final decision.

The source said Prudential had not been asked to dispose of any assets to meet regulatory approval in the region.

"South Korea's anti-trust agency the Fair Trade Commission has reviewed the Prudential-AIA deal regarding its impact on the South Korean market and ... delivered its approval on the deal to Prudential," an official at the FTC said.

Prudential's mammoth deal is not without risk. Analysts have highlighted possible shareholder dissent, regulatory issues and above all the complexity of merging two diverse companies that have been rivals for decade in the region.

However, the source said Prudential was confident of receiving shareholder support to clinch the deal. "There is good support for the deal," the source said.

Prudential needs 75 percent shareholder support for the deal when the voting takes place on May 27.

The source declined to be identified because of the sensitive nature of the discussions.

Newspaper reports out of London this week said Prudential's largest shareholder, Capital Research & Management, had reservations about the deal and would prefer a break-up of Prudential. Capital has 12 percent of Prudential's shares spread across three separate group vehicles.

Prudential has also been criticized over its massive $21 billion rights offer to part-fund the acquisition. Some British shareholders are finding it hard to raise funds to participate in the rights offer. The source said Prudential was not considering tweaking the terms of the deal.

"The only thing they could have done to reduce the scale of the rights issue was to get in a strategic investor. They had opportunities, but that would have been very dilutive," the source said. "They don't see it as necessary to tweak the terms of the deal."

The prospectus for the rights offer is scheduled to be released next week, while Hong Kong and Singapore listing is due to start on May 11.

Prudential's bid has been masterminded by Chief Executive Tidjane Thiam. The deal is also critical for AIG, which received a $182.3 billion taxpayer-funded rescue after its near collapse in September 2008. A collapse of the deal would also be a setback for the U.S. government.

Prudential's cash call is fully underwritten by Credit Suisse (CSGN.VX), HSBC Holdings (0005.HK) (HSBA.L) and JP Morgan Cazenove.

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