Prudential - Combination with AIA Group Limited and related rights issue and senior debt issue

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Slaughter and May is advising Prudential plc on an agreement with American International Group ("AIG"), on terms for the combination of Prudential and AIA Group Limited ("AIA"). AIA is a leading life insurance organisation in Asia Pacific. AIG will receive total consideration of USD 35.5 billion, comprising USD 25 billion in cash and a total of USD 10.5 billion in shares and other securities.

The combination which was announced on 1 March 2010 will be effected through the acquisition of both Prudential and AIA by a new company that will assume the name Prudential plc and be headquartered and incorporated in the UK, and traded on the main market of the London Stock Exchange with ADR's on the New York 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 will be financed through an underwritten rights issue, raising USD 20 billion (net of fees and expenses) and through the issuance of USD 5 billion senior debt (net of fees and expenses). Credit Suisse, HSBC and J. P Morgan Cazenove are acting as global co-ordinators and joint bookrunners and have undertaken to underwrite the rights issue. Credit Suisse, HSBC and J.P. Morgan Cazenove have committed to provide senior debt underwriting. The rights issue has been reported as "one of the biggest cash calls by a UK company" (Robert Peston BBC business editor 01/03/2010)

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, supported by a strong presence in the US and the UK.

Cleary Gottlieb Steen & Hamilton advised on US law.

London Office: William Underhill (partner), Nilufer von Bismarck (partner), Robert Chaplin (partner), Roland Turnill (partner), Susannah Macknay (associate), Athene Blakeman (associate), Kate Varley (associate); Financing: Guy O'Keefe (partner), Matthew Tobin (partner), Richard Levitt (partner), Alex Biles (associate), Caroline Boon (associate); Competition: Bertrand Louveaux (partner); IP/IT: Susie Middlemiss (partner), Andrew Mercer (associate); Financial Regulation: Jan Putnis (partner); Tax: Michael Lane (partner), Richard Jeens (associate)

Hong Kong Office: Padraig Cronin (partner), Laurence Rudge (partner)