US Will Cut Its AIG Stake To 23% From 53%, By One Estimate
By J.J. McGrath | September 10, 2012 12:30 PM EST
Because of the U.S. Treasury Department's announcement Sunday that it has launched an underwritten public offering of $18 billion worth of its American International Group Inc. (NYSE: AIG) common stock, the government will soon go from being the company's majority shareholder to being one of its minority shareholders.
Based on AIG's closing share price of $33.99 on Friday, the company's market capitalization is about $58.75 billion.
The contemplated sale would cut the U.S. government's stake in AIG to about 23 percent from about 53 percent, according to Bloomberg News.
The U.S. government became AIG's biggest shareholder because of the incredibly large bailout required by the insurance behemoth during one of the ongoing financial crisis' peaks in 2008. The rescue cost is estimated as being as much as $182.5 billion by most accounts. Of course, a great deal of that money has since been repaid to the taxpayers.
"AIG has indicated that it intends to purchase up to $5 billion of the common stock sold by Treasury in this offering at the initial public offering price," the Treasury Department said. The company raised about $2 billion last week by selling shares of its former AIA Group Ltd. unit in preparation for this buyback of its own shares, the firm said.
Meanwhile, "Treasury will also grant to the underwriters in the offering a 30-day option to purchase up to an additional $2.7 billion in common stock from Treasury to cover overallotments, if any," the Treasury Department said.
In addition, Merrill Lynch, Pierce, Fenner & Smith Inc., Barclays Capital Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC, UBS Securities LLC, Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC, and Macquarie Capital (USA) Inc. have been retained as joint bookrunners for the offering.
A Treasury Department sale of AIG common stock had been widely anticipated, as noted by Reuters. However, the stunning size of this planned sale was unexpected, as also pointed out by the news agency.
To contact the editor, e-mail:
Most Popular Slideshows
- NFL Recap - Week 4: Green Bay Packers 38, Chicago Bears 17 [PHOTOS]
- Derek Jeter With The New York Yankees Through The Years [IN PICTURES]
- Photos Of George Clooney And Amal Alamuddin, They Get Married Again On Monday [Slideshow]
- Taylor Swift's Famous Ex-Boyfriends: From Harry Styles To Joe Jonas [PHOTOS]
Join the Conversation
- 3 Signs Nexus 6, 8 Release Date Nears: Leaked Pics, KitKat Factory Image & Android L Details Emerge
- Samsung Galaxy Note 4 Available Through O2 For £380, Other Carriers To Follow Soon
- Apple iPhone 6 vs. OnePlus One: With Invitation-Only Model Rested, OnePlus One Can Be A Real Threat To iPhone 6
- ISIS Supporters are Walking Among the Many in the United States – Report
- New Windows OS Is Not Windows 9, Microsoft To Launch Windows 10 As New OS Build
- ISIS Receives Food, Ammunition Due To Mistake Of Iraqi Pilots
- Airstrikes Against ISIS Has Claimed Innocent Lives In Syria, Dubbed ‘Ineffective’ By Jihadi Fighters, US Military To Ask For More Spending Money