Update: AIG Submits $46 a Share Bid for American General

Updated from 5:01 p.m. ET

American International Group (AIG Quote) issued a $46-a-share bid Tuesday for rival insurer American General (AGC Quote), which has been mulling a merger offer from the U.K.'s Prudential PLC (PUK Quote).

AIG's all-stock offer, worth $23 billion, appears to top the Prudential bid, which was originally valued at $26.5 billion but fell along with the price of Prudential's stock.

The tender offer was announced after the close of regular-session trading. American General shares finished at $36.80 on the New York Stock Exchange, but were up $6.20, or 16.8%, to $43 in after-hours Instinet trading. Prudential rose $3.99, or 19%, from their regular-session close of $21.01.

AIG said its offer price would remain in effect as long as its shares trade within a 5% range during an agreed upon period prior to the closing date of the merger. AIG closed Tuesday at $80.21. That effectively placed a range of 0.5462 shares to 0.6037 shares of AIG for each share of American General.

"We believe that the combination of our two companies is uniquely attractive, in terms of mix of businesses and distribution channels, and would be highly beneficial financially to both of our shareholder groups," AIG said in a statement.