Prudential may have won cut in AIG price

Sources said a Stock Exchange statement today was possible. The Pru declined to comment.

It is understood that Prudential's investors will back the bid for AIG's Asian life insurance arm provided it can negotiate the 10 per cent cut.

Capital Group, Prudential's leading shareholder with a 13 per cent stake, is expected to vote for the takeover if the price drops to between $31bn and $32bn, and other big investors are also ready to back revised terms.

Prudential, Britain's biggest insurer, was dramatically forced to re-open price negotiations with AIG last week because it feared the deal, seen by some of its investors as too expensive, might fail to garner the required 75 per cent approval at a shareholder vote on Monday next week.

A Prudential team led by chief executive Mr Thiam held talks in the US with AIG over the weekend.

The company could issue an update today when markets in the UK and US reopen after the Bank Holiday Monday.

Prudential is under pressure to reveal any revised terms before 6pm on Thursday, the deadline for institutional investors to register their proxy votes ahead of the ballot next week.

But Paul Mumford, senior fund manager at Cavendish Asset Management, said even a 10 per cent price cut was unlikely to win over dissident investors.

"I'd be very surprised if the deal goes through, purely because I think it's such a bad deal.

"A 10 per cent cut in my opinion wouldn't be acceptable," he said.

"The sheer risks involved mean that institutional shareholders do need to have a very positive view in order to vote in favour of it."