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AIG Close to Selling Japanese Headquarters

Source: WSJ

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Posted on 04 May 2009

The Wall Street Journal reported on Sunday that American International Group Inc. (AIG) is close to selling its Japanese headquarters for about $1 billion, in a deal that would mark one of the largest divestitures the insurance company has made to pay off its government debt.

At least two suitors have been vying for the property, but the expected buyer is a Japanese insurance company, people familiar with the matter said.

The exact timing of a deal was unclear because of the Golden Week holidays in Japan, where markets will be closed until May 6. AIG put the Tokyo building on the market in February.

AIG owes the U.S. government about $45 billion as part of a rescue package that could total as much as $173.3 billion.

A sale of the 15-story headquarters, which is adjacent to the Imperial Palace, would serve as a reminder of the insurer's dwindling influence in Asia, where AIG was long viewed as a symbol of U.S. economic might. AIG arrived in Japan in the aftermath of World War II at the invitation of Gen. Douglas MacArthur, setting up shop near the general's headquarters on the roughly one-acre site it has occupied since.

Tokyo's commercial real-estate market has been more resilient than those in other international hubs in recent months and a $1 billion sale price for the AIG building would be in line with what the company was asking.

Former AIG Chief Executive Maurice "Hank" Greenberg, who led the insurer for nearly 40 years, has warned against selling the building, arguing that a sale would further sap morale among the insurer's Japanese employees.

AIG recently shelved plans to divest itself of its core insurance operations, including those in Asia, because of poor market conditions.

The company has continued to pursue the sale of real estate and other ancillary businesses, such as its aircraft-leasing unit. Last month, it agreed to sell its personal car-insurance unit to Zurich Financial Services AG for $1.9 billion, the largest divestiture since its government bailout in September.

A sale of the AIG's airplane leasing business, International Lease Finance Corp., also may be nearing, according to people familiar the matter.

The U.S. government, which has agreed to help finance a sale, is expected in coming weeks to clarify the requirements it will place on potential buyers.

The unit, which has drawn interest from several private equity-led consortia, could fetch $4.5 billion to $6 billion, according to people close to the auction.


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