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Treasury to cede majority ownership of AIG

by Lou Whiteman  |  Published September 10, 2012 at 9:33 AM
aig_227x128.jpgThe U.S. Treasury Department on Sunday, Sept. 9, said it intends to sell about $18 billion worth of stock in American International Group Inc., a move that would cut the government's stake in the bailed-out insurer to below 50%.

AIG, which received more than $180 billion in government assistance in the early days of the 2008 financial crisis, would see the government's ownership stake fall to just under 25% if the deal is priced near the company's Friday close. The deal includes an option for the underwriters to purchase up to an additional $2.7 billion of AIG stock to cover overallotments.

Citigroup Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., and JPMorgan Securities LLC have been retained as joint global coordinators for the offering. Merrill Lynch, Pierce, Fenner & Smith Inc., Barclays Capital Inc., Morgan Stanley, RBC Capital Markets LLC, UBS Securities LLC, Wells Fargo Securities LLC, Credit Suisse Securities (USA) LLC and Macquarie Capital (USA) Inc. were all named as joint bookrunners.

New York-based AIG said it would buy back up to $5 billion of the shares. The company last week announced plans to sell part of its stake in former subsidiary AIA Group Ltd. in a deal that could raise up to $2 billion towards the buyback.

The company has used divestitures to simplify its business since the onset of the credit crisis and to repay the U.S. Treasury, which initially held a 92% stake after the bailout.

This latest stock sale, the fifth by Treasury, was expected, though the size of the offering will be a surprise to many. It is unclear how quickly Treasury will seek to divest its shares completely, and the government with its reduced stake would have less influence over AIG in terms of dictating when future sales will occur. AIG executives have said they expect the Treasury to be out of the stock by 2013.

The government still holds a sizable minority stake in General Motors Co. stemming from the 2008 financial crisis, and 74% of one-time GM auto lending arm Ally Financial Inc.
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Tags: . Merrill Lynch Pierce Fenner & Smith Inc. | 2008 financial crisis | AIA Group Ltd. | AIG | Ally Financial Inc. | American International Group Inc. | Barclays Capital Inc. | Citigroup Inc. | Credit Suisse Securities (USA) LLC | Deutsche Bank Securities Inc. | General Motors Co. | Goldman Sachs & Co. | JPMorgan Securities LLC | Macquarie Capital (USA) Inc. | Morgan Stanley | RBC Capital Markets LLC | U.S. Treasury Department | UBS Securities LLC | Wells Fargo Securities LLC

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