Britain’s Prudential (PRU.L) has made progress in make-or-break talks with UK regulators over its acquisition of AIG’s (AIG.N) Asian arm, and is close to announcing a deal, sources familiar with the matter said.

The insurer’s proposed US$35.5 billion ($49.6 billion) acquisition of American International Assurance (AIA) hit an embarassing last-minute snag last week, when the UK blocked Prudential’s plans to publish details of a US$21 billion cash call to finance the deal. Prudential and the Financial Services Authority (FSA) had found common ground in talks over the weekend, the sources said on Sunday, but further steps were needed to salvage the audacious takeover.

“We’re working towards a solution,” one source familiar with the situation said. “It has to be put back to (the FSA), it’s an ongoing process .... There’s been progress made.”

“The intention is to get the prospectus out as soon as possible,” another source familiar with the situation said. This source said further meetings would take place on Sunday.

The rights issue prospectus and further details on the deal are expected within days, but the sources made it sound unlikely they could be published as early as Monday.

Pru is facing an uphill struggle to salvage some credibility for its Chief Executive Tidjane Thiam, as it seeks the approval of cautious regulators against a background of jittery world markets and increasingly mutinous shareholders.

The group needs 75% of shareholders to approve the deal, but several major investors have expressed concern and their skepticism has increased following the unprecedented eleventh-hour delay.

Some investors could seek a reduction in the price of the deal in return for their support.

Prudential and the FSA declined to comment on Sunday.