American International Group Inc., the bailed-out U.S. insurer, has struggled to sell its main Asian unit as competitors balked at the price after a decline in global markets reduced funding options.
Prudential Plc’s attempt to cut the price of its $35.5 billion takeover of AIA Group Ltd. was rebuffed by AIG, leaving the acquisition in jeopardy. New York-based AIG, which initially planned to sell a minority stake in AIA after its 2008 bailout, has had to change course as would-be buyers were unable to deliver what the company considered an acceptable price.
Sept. 16, 2008: AIG accepts an $85 billion loan from the Federal Reserve and agrees to hand over majority control to the U.S. after bets on subprime mortgages drained cash from the firm.
Oct. 3, 2008: AIG plans to keep a majority stake “if at all possible” in AIA, which is “an incredible piece of property,” then-Chief Executive Officer Edward Liddy says in a conference call with investors. He says AIG will sell parts of American Life Insurance Co., another non-U.S. life insurer, to help repay the U.S.
Feb. 24, 2009: AIG is said to get bids from MetLife Inc. and Axa SA for Alico, which has operations in Japan and Europe. MetLife offered about $11.2 billion, say people familiar with the matter.
March 2, 2009: Alico and AIA will be transferred into Fed vehicles to lower AIG’s debt, the company says. The deal helps AIG refuse offers it considers inadequate.
March 18, 2009: Liddy tells Congress that “the continued deterioration of world markets and the inability of buyers to access capital have impeded our ability to secure sufficient value for AIG assets.”
May 13, 2009: Liddy tells Congress that AIA “probably” has a $25 billion value. “In an AIA or an Alico, there’s great excitement about those businesses,” he says.
June 18, 2009: AIG hired Deutsche Bank AG and Morgan Stanley to handle the initial public offering of AIA, which will be conducted in the first quarter of 2010, say three people familiar with the matter.
Dec. 1, 2009: AIG cuts Fed debt by $25 billion after transferring AIA and Alico to Fed vehicles in anticipation of initial public offerings or third-party sales, the company says.
March 1, 2010: Prudential agrees to pay $25 billion in cash and $10.5 billion in securities for AIA. London-based Prudential plans to conduct a record $21 billion rights offering to fund the purchase.
“In considering two viable, very attractive alternatives to successfully monetize AIA, including an initial public offering, we decided that a sale to Prudential enables AIG to realize value on a faster track,” says AIG CEO Robert Benmosche.
March 8, 2010: MetLife, the biggest U.S. life insurer, says it will pay $15.5 billion for Alico.
May 5, 2010: Prudential delays the start of its rights offering until U.K. regulators agree the combined company will have sufficient capital.
May 17, 2010: Prudential says it has reached an agreement with regulators on its capital position. Prudential will double profit in Asia within three years after the AIA takeover, and the unit’s value may increase 80 percent from the acquisition price in that time, the insurer says.
May 26, 2010: AIG “got a very aggressive price” for AIA, Benmosche tells the Congressional Oversight Panel in Washington. “At one point, they were thinking of selling AIA for the high teens,” he says.
May 28, 2010: Prudential says it’s having discussions with AIG about the AIA deal that “may or may not lead to a change in the terms of the combination,” according to a statement.
The U.S. Treasury Department says it considered no options from Prudential besides the $35.5 billion agreement.
June 1, 2010: AIG says it “will not consider revisions” to the original Prudential deal.