MetLife has entered into an agreement to acquire one of AIG's international subsidiaries, American Life Insurance Company (ALICO), for approximately $15.5bn, which consist of $6.8bn in cash and around $8.7bn in MetLife equity securities, to accelerates its global growth strategy.
Under the agreement, the equity security portion will consist of 78.2 million shares of MetLife’s common stock valued at $3bn, 6.9 million shares of contingent convertible preferred stock valued at $2.7bn and 40 million equity units having an aggregate stated value of $3bn.
The company expected the cash portion of purchase price to be financed through a combination of issuances of senior debt, MetLife common stock, and cash on hand.
According to MetLife, the transaction is expected to increase its 2011 operating earnings per share by around $0.45 to $0.55, and enables the company to increase its estimated 2011 year-end operating return on equity by 140 to 160 basis points.
As part of the transaction, both the companies will enter into an investor rights agreement which will require AIG to hold specified amounts of MetLife securities for designated periods of time. The ALICO special purpose vehicle intends to monetize the company’s securities over time, subject to market conditions, following lapse of agreed-upon minimum holding periods.
The transaction includes all of ALICO, including its 60,000 points of distribution, including agents, brokers and financial institutions; 12,500 employees across 50 countries; and 20 million global customers. It also includes ALICO’s global benefits network serving the US and foreign multinationals.
Robert Henrikson, chairman, president and CEO of MetLife, said: “With this acquisition, MetLife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company.
“Today’s transaction will bring together two profitable, complementary, well-established businesses with superb track records and strong long-term growth potential. We expect it will increase MetLife’s return on equity and be accretive to operating earnings.”