Prudential PLC announced that it plans to withdraw its offer to acquire American International Group Inc (AIG) Asian insurance unit (AIA). Prudential released a statement today saying that it's currently in talks with the giant insurer AIG to terminate the $35.3 billion deal to acquire AIA, due to the company's shareholder resistance to AIG demands, believing that the price is high, and AIG's refusal to sell the unit in a lower price.

AIG hoped to conclude the deal in order to make a partial repayment of U.S. government $180 billion bailout plan that was acquired last year. Prudential stated that the termination will cost the company $662 million, including $230.6 million in break fees. Prudential CEO Harvey McGrath stated that While AIA was an excellent Opportunity; since we announced the potential transaction we have seen significant falls in the markets, adding that We listened carefully to shareholders over the price and initiated a renegotiation of the terms with AIG. Unfortunately, it has not been possible to reach agreement so we feel it is in the best interest of our shareholders not to pursue this opportunity.

Prudential PLC (NYSE:PUK) share dropped by $0.16 or 0.97% to close Tuesday's trading at $16.53 a share, while AIG share rose by $0.48 or 1.40% to close Tuesday's trading at $34.25 a share.