Deals wrap: Dai-ichi’s $1.2 billion deal
Dai-ichi Life Insurance Co will take full control of Tower Australia Group Ltd for $1.2 billion in cash, the latest in overseas acquisitions by Japanese insurers keen to move away from a stagnant home market.
ChemChina plans to buy 60 percent of Israel’s MA Industries in China’s latest move to expand in the global agricultural chemicals market.
The red-hot trading market that has developed in the shares of privately held stocks has drawn the attention of the SEC, writes the NYT’s Peter Latman.
NTR’s Tessera Solar has suffered a major setback with the loss of a 663.5-megawatt power purchase agreement with utility Southern California Edison for its Calico solar power plant project, writes Todd Woody.
Stronger regional currencies may drive an M&A revival, writes Chana R. Schoenberger from the Dow Jones Newswires.
The afternoon deal: Beyond the billions paid
It was a two-year quest to seal the MetLife deal for Alico. Beyond the $15.5 billion purchase price, what does it mean for the companies and the life insurance sector?
* MetLife seals Alico deal after two-year quest * Factbox: AIG’s progress on asset sales
From the Web:
A.I.G. Sells Unit to MetLife (NYT) “Now comes the hard part.” – NYT
At AIG, What Is Left to Sell? (WSJ) “One might suggest selling the furniture, but AIG already sort of did that, unloading its downtown New York headquarters to a condo developer.” – WSJ
Alico Deal Will Transform MetLife (WSJ) “The bold and potentially risky deal would boost the portion of MetLife’s overall operating income that comes from overseas to 40% from 15% currently, estimates Andrew Kligerman, a UBS Securities analyst.” – WSJ AIG Giveth Back, and Taketh Away, from U.S. Taxpayers (BNET) “An old adage says that if you owe the bank a million dollars, the bank owns you. And when you are bailed out to the tune of tens of billions, well, then you have a piece of the U.S. Treasury.” (BNET)
Timeline: AIG ‘Jewel’ Took 91 Years to Build, Week to Dismantle (Bloomberg)
MetLife gets new life from AIG
MetLife is moving up in Japan, the world’s second-largest life insurance market, with the $15.5 billion purchase of Alico from AIG. The unit accounted for 70 percent of Alico’s pre-tax operating income in fiscal year. It also has operations in Europe and emerging markets in Central and Eastern Europe, the Middle East and Latin America. Much like the $35.5 billion sale of AIG’s Hong Kong-based AIA subsidiary the week before to Prudential of the U.K, a chunk of AIG is a transformative expansion for Metlife.
Both AIG and Metlife share rose on the news – one of those win-win deals, the market says. But if you want to be skeptical, just keep in mind that AIG is still only part of the way towards repaying the $182.3 billion it owes the U.S. government and Metlife has just exposed itself to an aging Japanese population with prospects in some ways even more worrying than in the U.S., given its lost decade and its near-routine bouts of deflation.
One thing Metlife will not have to worry about is having a government functionary on its board. Though the sale features a sizable equity component from AIG, we’re told that the chance of Uncle Sam calling the shots at yet another major U.S. corporation is nil.
AIG’s revolving CEO door
The Wall Street Journal reports AIG Chief Executive Robert Benmosche threatened to walk last week. Chafing after the recent compensation review by pay czar Ken Feinberg, Benmosche reportedly told AIG directors he was “done,” but the board talked him down and he agreed to think it over.
Benmosche took over as the insurer’s chief executive in August, becoming the fourth person to hold the post in about a year. On his watch, the recipient of up to $180 billion of federal aid, including more than $80 billion in loans, posted its second straight quarterly profit last week.
A recovery in the value of AIG’s investments has helped improve the bottom line at the 80 percent state-owned insurer, and it may be that the next CEO, if Benmosche catches the revolving door on the fly, will be able to justify better pay on improving performance. AIG said at the end of October it was no longer looking to sell two Japanese units, AIG Edison Life Insurance and AIG Star Life insurance, because it now believes they will help improve its corporate value.
There is still the matter of all that money owed to the U.S. government. Consider it a long-term objective for any AIG CEO.
Benmosche should go back to retirement and AIG should find a younger and talented CEO with a more positive attitude. Let the executives who don’t like the pay constraints go somewhere else. They can be replaced. The idea that the butcher, the baker and the carpenter should approve exorbitant compensations via the pay czar is disgusting.
Deals du Jour
Clive Cowdery’s Resolution has won over shareholders of Friends Provident, agreeing to pay 1.86 billion pounds for the British life insurer. Here are some facts about the pair. Whether the move will lead to a wave of consolidation in the sector remains to be seen, though last week the head of rival Standard Life told Reuters that it had no plans to make any deals.
Other M&A news today includes:
The total value of distressed-debt deals totalled $84.4 billion this year, the Wall Street Journal said, almost double the figure last year. Here’s Reuters’ story.
Private equity fund Dubai International Capital and distressed debt investor Oaktree Capital have abandoned plans to team up to restructure the debts of German aluminium firm Almatis, the Financial Times said.
India’s GMR group is considering listing its global holding firm on the London Stock Exchange as a step towards building a global asset portfolio worth $10 billion, the Business Standard reported.
