By Jennifer Chiou
New York, Jan. 24 - American International Group, Inc. announced that it submitted a letter to the board of directors of 21st Century Insurance Group proposing to acquire the outstanding 38.1% publicly held 21st Century shares for $19.75 per share in cash.
AIG and its subsidiaries own 61.9% of 21st Century shares, and following the transaction, 21st Century would become a wholly owned subsidiary of AIG.
The aggregate cash consideration would be about $690 million.
The proposed per share price represents a 19% premium over Wednesday's closing price and a 25.5% premium to the average closing price during the last 12 months.
AIG added that the proposed per share price also represents a multiple of 19.6 times the consensus estimates of 21st Century's 2007 earnings per share, based on a current First Call estimate of $1.01 per share.
"Our proposal represents an excellent opportunity for 21st Century's shareholders to monetize their investment at a full and fair value for their shares. For AIG, this is an opportunity to make a substantial additional investment in a business we know well," said Martin J. Sullivan, president and chief executive officer of AIG, in a news release.
AIG, a New York-based insurance and financial services firm, said it advised 21st Century that its sole interest is in acquiring the remaining shares of 21st Century held by the public shareholders and that it has no interest in a disposition of its controlling equity stake in the company.
Banc of America Securities LLC and J.P. Morgan Securities Inc. are AIG's financial advisors.
| Acquirer: | American International Group, Inc.
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| Target: | 21st Century Insurance Group
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| Payment per share: | $19.75 per share cash
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| Announcement date: | Jan. 24
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| Expected closing: | Not disclosed
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| Stock price for target: | NYSE: TW; $16.34 on Jan. 23
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| Stock price for acquirer: | NYSE: AIG; $69.80 on Jan. 23
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