In a Wednesday statement, UK insurance biggie Prudential PLC has revealed that it is dropping its plans to go in for the acquisition of AIA Group Ltd. – the Asian life insurance division of American International Group
(AIG) – after its failure to renegotiate a lower price for the $35.5 billion transaction.

While the original deal for AIA acquisition included $25 billion in cash, Prudential had later revised its $30.4 billion offer for the company to include $23 billion in cash, with the remaining amount in shares and other securities.

According to the information forwarded by the London-based insurer, the total costs associated with the AIA transaction, thus far, were approximately 450 million pounds, including a break fee of about 152.569 million pounds, which will be paid to AIG.

In a statement released on Wednesday, Prudential’s CEO Tidjane Thiam said: “We entered into this potential transaction from a position of strength in Asia and we view the region as offering excellent growth opportunities for Prudential. We agreed with shareholders that a renegotiation of the terms was necessary given market movements but it has not proved possible to reach agreement.”

With Prudential announcing its withdrawal from the AIA transaction, it becomes quite apparent that the AIA unit – with 320,000 agents and 23 million customers – is probably too big to be acquired by a rival; thereby leaving a public offering as the most likely alternative before AIG for divesting the business.