Summary
On March 7, 2012, American International Group, Inc. (AIG) announced the completion of a significant transaction involving its stake in AIA Group Limited (AIA). AIG sold 1.72 billion ordinary shares of AIA to institutional investors, generating approximately $6 billion in gross cash proceeds. This sale reduced AIG's ownership in AIA from roughly 33% to 19%. The fair value of AIG's remaining stake in AIA was valued at approximately $7.8 billion as of the transaction date. This divestiture is a key step in AIG's ongoing strategy to deleverage and reduce its exposure to certain assets. The proceeds are expected to be used to further pay down preferred interests held by the U.S. Department of the Treasury. Investors should note the lock-up period, restricting AIG from selling its remaining AIA shares until September 4, 2012, with customary exceptions. Pro forma financial information indicates a modest negative impact on net income per share for the year ended December 31, 2011, primarily due to unrealized appreciation and transaction costs.
Key Highlights
- 1AIG sold 1.72 billion AIA Group Limited ordinary shares on March 7, 2012.
- 2The sale generated gross cash proceeds of approximately $6 billion.
- 3AIG's ownership in AIA decreased from approximately 33% to 19%.
- 4The fair value of AIG's retained AIA shares was approximately $7.8 billion as of March 7, 2012.
- 5AIG is restricted from selling remaining AIA shares until September 4, 2012 (subject to exceptions).
- 6Proceeds are intended to reduce preferred interests held by the U.S. Department of the Treasury.
- 7Pro forma analysis shows a potential decrease of $0.13 per share in net income for FY2011 due to the transaction.