American International Group‘s bailout sounds a lot like the conservatorship of Freddie Mac and Fannie Mae. The Treasury will be at pains to make sure everybody knows AIG shareholders are getting wiped out, not bailed out. Meanwhile, the fired management of AIG will be due millions of dollars in golden anvils (as opposed to the parachutes reserved for privately saved company executives). Then, there is an off-chance that during the two years that AIG’s organs are harvested, the markets recover dramatically enough to more than pay for the $85 billion loan the government made to AIG in exchange for its near-80 percent stake. Presumably, that money could go to existing shareholders. But given the hefty interest rate on the loan — 850 basis points over LIBOR – the chance of any payoff is as slim as the day is short.
Bit buyers for AIG’s lucrative assets are already seen around the world licking their chops. Japan’s well-capitalized and acquisitive insurers and Australia’s top player are seen as potential buyers. China’s ambitious insurers would be more cautious given market turmoil at home. It was not immediately clear if insurance businesses might come up for sale, although The Wall Street Journal reported earlier this week that AIG, which operates in more than 100 countries, might sell Transatlantic Holdings, its reinsurance group, with Europe’s Swiss Re and Munich Re as potential buyers. Analysts have also said Canadian life insurance company Manulife Financial would be interested in some of AIG’s businesses.
Other deals of the day:
* U.S. flash memory maker SanDisk rejected a near-$6 billion offer from global market leader Samsung Electronics, but said it would not rule out a deal at a better price.
* U.S. investment bank Morgan Stanley is weighing whether it should remain independent or merge with a bank, given the recent turbulence in the company’s share price, broadcaster CNBC reported.
* Ferrovial‘s British airports operator BAA said it is putting its Gatwick airport in London up for sale — but vowed to fight to retain the rest of its portfolio.
* British bank Lloyds TSB is in merger talks with the country’s biggest mortgage lender HBOS , a person familiar with the matter said.