American International Group to Sell Life Insurance Unit For Metlife
American International Group agreed Sunday to sell large life insurance unit to MetLife for approximately $ 15.5 billion, people familiar with the matter told DealBook, in what would be the second major operation in a week to help pay for taxpayers who funded bailout.
On Sunday night, the boards A.I.G. and MetLife has approved an agreement for the unit, the American Life Insurance Company, said these people. The agreement for the unit, known as Alice, is expected to be announced as soon as Monday morning, these people said.
This followed an agreement A.I.G. last week to sell the other major insurance unit American International Assurance, Prudential PLC of Britain for 35.5 billion U.S. dollars. Together, the two sales will increase by approximately $ 51 million.
Under the terms of the Alico, MetLife is paying about $ 6.8 million in cash and the rest consists of common and preferred shares, including mandatory convertible preferred stock. The first results of $ 9 million from the sale will go to the selection of the redemption of shares of Alico, organized by the Federal Reserve Bank of New York and the rest will be used to reduce the commitments of the New York Fed AIG loan (This means that 2.2 billion U.S. dollars of the securities will be seated in the vehicle specifically created for the purpose of holding the New York Fed, shares of Alico until its sale, said these people.)
Through sales, A.I.G. which will initially have about an 8 percent Metlife, although, in principle, lack of independent voters, these people said. As AIG's stock options will be converted into ordinary shares for several years, the population could rise to more than 20 percent.
This agreement is expected to close in late 2010, these people said. Metlife expects the deal will significantly increase earnings per share in 2011, at 45 cents to 55 cents per share, excluding a one time fee.
MetLife and A.I.G. has held discussions about a potential deal for most of Alico for the past year, people briefed on the matter told DealBook. While the contours of the offer had set weeks ago, negotiations were delayed due to questions about tax issues that require clarification by the IRS.
One question now is how A.I.G. pay the rest of the rescue plan, including a share of 79.9 percent still held by the government. One possibility being considered is the option to change the government's actions to the common shares are sold from time to time, either by direct conversion or through reimbursement by issuing new shares, a person briefed on the matter told DealBook.
"Economically, the government's interest is replaced by private capital," said this person.
It reminds people that there has been no set plan in place, even if AIG does not have big plans for the sale other than the removal of the aircraft leasing arm.
Metlife advised by Credit Suisse, Barclays Capital, HSBC, Bank of America, Merrill Lynch and Deutsche Bank, while AIG is suggested by the Blackstone Group, Citigroup and Goldman Sachs. New York Fed proposed by Morgan Stanley.
- Michael J. de la Merced
On Sunday night, the boards A.I.G. and MetLife has approved an agreement for the unit, the American Life Insurance Company, said these people. The agreement for the unit, known as Alice, is expected to be announced as soon as Monday morning, these people said.
This followed an agreement A.I.G. last week to sell the other major insurance unit American International Assurance, Prudential PLC of Britain for 35.5 billion U.S. dollars. Together, the two sales will increase by approximately $ 51 million.
Under the terms of the Alico, MetLife is paying about $ 6.8 million in cash and the rest consists of common and preferred shares, including mandatory convertible preferred stock. The first results of $ 9 million from the sale will go to the selection of the redemption of shares of Alico, organized by the Federal Reserve Bank of New York and the rest will be used to reduce the commitments of the New York Fed AIG loan (This means that 2.2 billion U.S. dollars of the securities will be seated in the vehicle specifically created for the purpose of holding the New York Fed, shares of Alico until its sale, said these people.)
Through sales, A.I.G. which will initially have about an 8 percent Metlife, although, in principle, lack of independent voters, these people said. As AIG's stock options will be converted into ordinary shares for several years, the population could rise to more than 20 percent.
This agreement is expected to close in late 2010, these people said. Metlife expects the deal will significantly increase earnings per share in 2011, at 45 cents to 55 cents per share, excluding a one time fee.
MetLife and A.I.G. has held discussions about a potential deal for most of Alico for the past year, people briefed on the matter told DealBook. While the contours of the offer had set weeks ago, negotiations were delayed due to questions about tax issues that require clarification by the IRS.
One question now is how A.I.G. pay the rest of the rescue plan, including a share of 79.9 percent still held by the government. One possibility being considered is the option to change the government's actions to the common shares are sold from time to time, either by direct conversion or through reimbursement by issuing new shares, a person briefed on the matter told DealBook.
"Economically, the government's interest is replaced by private capital," said this person.
It reminds people that there has been no set plan in place, even if AIG does not have big plans for the sale other than the removal of the aircraft leasing arm.
Metlife advised by Credit Suisse, Barclays Capital, HSBC, Bank of America, Merrill Lynch and Deutsche Bank, while AIG is suggested by the Blackstone Group, Citigroup and Goldman Sachs. New York Fed proposed by Morgan Stanley.
- Michael J. de la Merced
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