Gediminas Jasionis

Dim future outlook for American International Group, Inc. (NYSE:AIG)

by Gediminas Jasionis February 6, 2009
AIG_Logo.gifAmerican International Group, Inc. (NYSE:AIG) stock is hitting new lows on talks about asset selloffs. The company is targeted by Bank of Ayudhya Public Company Limited which intends to acquire severa;branches of AIG. The agreement between the two companies was announced on Thursday , February 5, 2009.

Both companies agreed that Bank of Ayudhya will acquire AIG Retail Bank Public Company Limited and AIG Card (Thailand) Company Limited. The transaction should be completed in April this year.

It also requires approval from shareholders, however, considering the position AIG is in, the sale of assets should get their blessing without any difficulties.

AIG has $477 million in loans held under the aforementioned facilities. Those loans will be covered upon the completion of this transaction. The amount that Bank of Ayudhya will pay for AIG's assets sums up to around $58.7 million.

The acquisition will boost Bank of Ayudhya's assets and increase its market share in the banking sectors in Thailand. AIG will raise money needed to repay the $85 billion loan it received from the US government. So it looks like a win-win situation, except for the fact that AIG is losing position in the market.

AIG stock has been hitting new lows as the company keeps announcing new sell offs. In the past three weeks AIG sold or proposed for selling its Asian life assurance unit, fund management business, Philippine Consumer Units, Commodity Index Business, Life Insurance Company and other units. The company also received bids for a securities unit in Taiwan and its aircraft leasing unit.

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Asian unit is considered one of the most prosperous and valuable assets of AIG. Considering they're forced to sell such assets suggests that the situation has gotten way out of control. It seems that if the sell off continues at this rate, there might be no company left when the governmental loan is returned.

References:

American International Group (AIG) message board on HotStocked

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