Efforts to sell American International Group Inc.'s (NYSE:AIG) asset management business have stalled after another week of negotiating. Now, the price of AIG Investments has fallen, according to
The Wall Street Journal.
AIG has been in talks to finalize the deal with Franklin Templeton Investments Inc. since May and the price has fallen from $800 million to between $350 million
and $450 million. Apparently, one of the key factors is the management, according to the report.
Complicating matters are questions about who would fill management
jobs. If current AIG Investments executives remain in their positions
and buyers assume certain employee-benefit costs, that could result in
a lower price being paid for the business, people familiar with the
talks said.
The Franklin-led group is being advised by Charles E. "Chuck"
Johnson, a former Franklin Templeton executive and deal maker for the
firm who now runs a small California private-equity firm. Another
partner is Crestview Partners LP, a New York private-equity firm.
Potential backers include Richard Li, the prominent Hong Kong
businessman who runs Pacific Century Group and is the son of Li
Ka-shing, one of Asia's wealthiest people.
If the auction opens again, there are other potential buyers for the unit including Macquarie Group Ltd. and Religare Enterprises Ltd. Similarly, Bank of America Corp. (NYSE:BAC) is having trouble selling its investment management unit and
could wind up breaking up the unit and selling it in pieces if it means selling it for more cash. Could AIG wind up doing something similar? We shall see.
This isn't the only auction that is running into trouble. There's some question over how successful AIG's International Lease Finance auction will be
due to recent plane crashes. Co
ncerns over the AIG Advisor Group auction also loom since there could be a mass exodus from the unit. Some wonder if these worries could cause the valuations on these auctions to plummet. If so, that's a huge problem for the insurer, which is currently trying to auction off assets to raise back its $180 billion loan from the government.
So far, the insurer is a long way from its goal, raising only about $6.7 billion from asset sales, according to Bloomberg. - Maria WoehrFor more details about AIG's auctions also see:
A
IG chooses i-banks for AIA IPOBuyout shops join auction for AIG's Nan ShanAt AIG meeting all is secure except future
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