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Insurance

AIG Acquires SunAmerica in $18 Billion Deal

Strategic Insights

— 2 min read

American International Group, Inc. (AIG) has entered into a definitive agreement to acquire 100 percent of the outstanding common stock of SunAmerica Inc. for approximately $18 billion. The proposed transaction will be treated as a pooling of interests for accounting purposes and will be a tax-free reorganization. SunAmerica will continue to operate as a separate company with its existing management, corporate name, and Los Angeles headquarters within the AIG family.

Key Takeaways:

  • The acquisition of SunAmerica is valued at approximately $18 billion, with SunAmerica shareholders receiving 0.855 shares of AIG common stock for each share of SunAmerica common stock.
  • The transaction is subject to various regulatory approvals and other customary conditions, as well as the approval of AIG and SunAmerica shareholders.
  • Eli Broad, Chairman of the Board and Chief Executive Officer of SunAmerica, has agreed to vote his shares in favor of the merger and is expected to be elected to the AIG Board of Directors.
  • Jay S. Wintrob, Vice Chairman of SunAmerica, is also expected to be elected to the AIG Board of Directors.
  • The merger is expected to close in late 1998 or early 1999.
  • SunAmerica will continue to operate as a separate company with its existing management, corporate name, and Los Angeles headquarters within the AIG family.
  • The acquisition positions AIG in a major market where it has not been well represented, enabling AIG to introduce SunAmerica's retirement products into world markets where the need for private retirement products is growing rapidly.
  • The retirement market is a burgeoning one, with great synergies available in countries where AIG has a major presence.
  • AIG will benefit from an enhancement of its presence in the important Los Angeles insurance and financial services market.
  • SunAmerica's distribution network is second to none, providing a complementary resource for AIG.
  • The merger is a cultural fit between the two companies, with a strong track record of consistent earnings growth.

Statistics:

  • The proposed transaction is valued at approximately $18 billion.
  • SunAmerica shareholders will receive 0.855 shares of AIG common stock for each share of SunAmerica common stock.
  • The merger is expected to close in late 1998 or early 1999.
  • AIG is the leading U.S.-based international insurance organization and among the largest underwriters of commercial and industrial insurance in the United States.
  • SunAmerica is a financial services company specializing in retirement savings and investment products and services.

Sources:

  • American International Group, Inc. /CONTACT: Joe Norton, News Media, 212-770-3144, Charlene Hamrah, Investment Community, 212-770-7074, both for AIG; Don Spetner, News Media, 310-772-6775, or Karel Carnohan, Investment Community, 310-772-6533, both for SunAmerica Inc./
  • SOURCE American International Group, Inc.

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