Speculation grew Tuesday that MetLife is negotiating to buy American International Group Inc.'s American Life Insurance Co.
The price under discussion for the company, known as Alico, is said to be between $14 billion and $15 billion. Analysts had expected more companies to bid for Alico. Yet liquidity concerns over AIG's units made it a less attractive target, said Bill Bergman, a senior equity analyst at Morningstar.
On Dec. 1, AIG announced it had closed a transaction with the Federal Reserve Bank of New York positioning Alico for an initial public offering or third party sale, depending on market conditions. As part of the deal, AIG contributed the equity of Alico to a special purpose vehicle. The New York Fed agreed to exchange $25 billion of its loans to AIG for a stake in Alico and AIG's American International Assurance Company, or A.I.A. In return the Fed will receive $9 billion from an Alico sale or offering and about $16 billion from the A.I.A. offering.
MetLife did not return emails seeking comment. AIG did not return phone calls seeking comment.
This story has been reprinted with permission from American Banker.
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