The U.S. Department of the Treasury will offer $18 billion of its common stock in American International Group Inc. (AIG) at $2.50 per share and will grant a 30-day option to the underwriters to purchase an additional $2.7 billion of the stock to cover any over allotments, according to a press release from Treasury. The sale will reduce Treasury’s holdings in the company by half, reducing the government to a minority shareholder.

Treasury said AIG will purchase up to $5 billion of the stock at the initial public offering price, as previously announced and authorization by the AIG board of directors.

Starting in September 2008, the company received a total of $150 billion in bailout funds from the U.S. Federal Reserve Bank and U.S. Treasury as the company collapsed as a result of exposure to more than $440 billion in credit derivatives.

Citigroup, Deutsche Bank Securities Inc., Goldman, Sachs & Co., and J.P. Morgan Securities LLC have been retained as joint coordinators for the offering. Merrill Lynch, Pierce, Fenner & Smith Incorporated, 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 book-runners for the offering.

In a press release, Treasury said the offering will be made “under the company’s shelf registration statement filed with the Securities and Exchange Commission and only by means of a prospectus supplement and accompanying prospectus.”

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