MetLife confirms USD15.5bn deal to buy AIG’s Alico

US insurer MetLife (NYSE:MET) confirmed today it has struck a deal to buy the foreign life insurance unit of AIG (NYSE:AIG), American Life Insurance Co (Alico), for USD15.5bn (EUR11.4bn) in cash and stock.

Under the agreed terms, MetLife will pay USD6.8bn in cash and USD8.7bn in company shares. The cash part will be funded with a combination of an issue of senior debt and shares and available cash on hand.

The acquisition of Alico will speed up MetLife's global growth strategy and will make it a leading competitor in Japan, the company said in a statement. In addition, the deal will push up MetLife in the top five life insurers in central and eastern Europe, the Middle East and Latin America.

The group expects the deal to boost its 2011 operating earnings per share by between USD0.45 and USD0.55.

In a separate statement, AIG said it would use the proceeds from the sale together with those booked from last week's sale of its Asian unit AIA to UK's Prudential (LON:PRU) to repay its USD32bn debt to the Federal Reserve.

The transaction has already got clearance by the boards of directors of both companies and is expected to close by the end of 2010 upon receipt of regulatory approval.

Credit Suisse (VTX:CSGN) and Barclays Capital are acting as financial advisor to MetLife. BofA Merrill Lynch, Deutsche Bank (ETR:DBK) and HSBC (LON:HSBA) are also serving as financial advisors to MetLife, while Dewey & LeBoeuf LLP is legally advising the company.

In 2008, Alico booked a statutory revenue of USD32.3bn and an after-tax operating income of USD1.3bn. Assets under management total USD89bn.

Country: ; USA

Sector: Insurance;

Target: American Life Insurance Co (Alico)

Buyer: MetLife Inc

Vendor: American International Group Inc (AIG)

Deal size in USD: 15.5bn

Type: Corporate acquisition

Financing: Debt; Cash & Stock

Status: Agreed

Buyer advisor: Dewey & LeBoeuf LLP ; HSBC Holdings Plc; Deutsche Bank AG; BofA Merrill Lynch; Barclays Capital ; Credit Suisse Group AG

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