American International Group Inc. (NYSE:AIG) is doing a well publicized crash diet, trying to unload assets to repay Uncle Sam. The results, however, haven't impressed Citigroup Inc. (NYSE:C) research analyst Joshua Shanker who predicted AIG's stock could fall to zero. His words sent investors fleeing AIG even as the New York-based insurer pulled off a deal in Asia and renewed talks about selling a unit to MetLife Inc. (NYSE:MET). Meanwhile, the Dow finished Thursday up 4.76, or .06%, to 8,183.17, while the Nasdaq closed up 5.38, or .31%, to 1,752.55.
Shares of AIG were pummeled, closing down $3.69, or 28.27%, to $9.41 as Shanker said the insurer's shares could become worthless due to credit default swaps, as well as management's increased openness to disposing of businesses at low valuations. Shanker elaborated in his report, "Such collateral calls could also pressure rating agencies to lower their credit ratings for the company, leading to a similar cycle to the one that the company experienced prior to the massive government intervention in the third quarter."
The harsh evaluation coincided with AIG's renewed talks of selling its Alico unit to MetLife. The two had broke off discussions in March when AIG wanted around $20 billion and MetLife offered $11 billion. MetLife shares closed up 73 cents, or 2.71%, to $27.63. Meanwhile, AIG did reach an agreement with Far Eastern International Bank to sell its Taiwanese credit card unit, AIG Credit Card (Taiwan) Ltd., for $70.5 million.
Meanwhile, the Emulex Inc. (NYSE:ELX)-Broadcom Corp. (NASDAQ:BRCM) merger is officially dead. Emulex rejected Broadcom's sweetened $11 per share, or $912 million, takeover offer, saying the bid undervalued the company's longer-term prospects. (See The Deal Pipeline Deal Memo -- subscription required.) Emulex finished down 77 cents, or 7.94%, to $8.93, while Broadcom closed up 96 cents, or 4.11%, to $24.31.
Lastly, FiberNet Telecom Group Inc. (NASDAQ:FTGX) closed up $1.10, or 8.87%, to $11.30 as RCN Corp. (NASDAQ:RCNI) dropped its $12.50 per share offer. The withdrawal pushed the target to return to Zayo Group LLC's $11.45 per share bid, which it first made in May prior to RCN's bid. (See The Deal Pipeline story -- subscription required.) - Gerald Magpily
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