MetLife Inc. (NYSE: MET) is in serious negotiations to purchase the American Life Insurance Co (Alico) from American International Group (NYSE: AIG) for roughly $15 billion in what would be a cash and stock deal, according to recent reports.
Concerns over a large stock payment are present due to the government’s large stake in Alico, which it inherited as part of the $182.3 billion taxpayer bailout of AIG in the fall of 2008. Alico is in a special purpose vehicle that the New York Federal Reserve holds a preferred stake in. Receiving stock as a large portion of repayment does bring complexity to how taxpayers would be paid back.
According to a Bloomberg report, MetLife is looking to pay use stock to pay $8 billion of the balance, with the remaining being $7 billion being in cash. Talk also exists that a $5 billion bridge loan to complete the deal may be provided to MetLife by JP Morgan Chase (NYSE: JPM), Bank of America (NYSE: BAC) and Deutsche Bank.
Alico sells life and retirement products to 19 million customers in 54 countries, based out of headquarters in Wilmington, Delaware.
AIG’s CEO Robert Benmosche is restricted from the discussions to sell Alico to MetLife as part of his contract since he is a former MetLife chief executive.
MetLife confirmed a week ago that it was in talks to buy Allico, but had not reached a deal at that point. The insurance firm made it clear that none of its current business units would be sold in order to make a deal work.
