Prudential’s proposed deal for AIG’s Asian Insurance arm might become much more expensive if the pound’s slide continues, according to FT Alphaville.
They report that the buyout of the American insurance giant’s Asian holdings isn’t supposed to really get going until May, when some are predicting the pound to be much lower against the dollar, pointing south of $1.40 per pound.
What this means for the deal isn’t certain. FT Alphaville speculates that Prudential would have hedged their currency risk in the deal, a likely event.
But at the same time, this deal is now not a cheap one for the UK insurance group and could get much more expensive, perhaps even endangering its value, if speculators continue to ramp up pound negativity as the election comes closer.
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