Carl Icahn to Solicit Shareholder Support for AIG Breakup -- 2nd Update
November 23 2015 - 10:31AM
Dow Jones News
By Anne Steele
Carl Icahn said he intends to begin a consent solicitation to
give shareholders at American International Group Inc. the chance
to express their views to the board, a move he hopes will offer a
mandate to force the insurer to consider his breakup plan.
The activist investor, who said he owns more than 42 million AIG
shares, is pushing the giant insurer to pursue a split into three
separate companies. A key part of his case is that if AIG were
split up, each of the companies would be small enough to avert the
"systemically important financial institution" designation, which
carries heightened scrutiny and requirements to hold robust capital
buffers against losses.
In a statement released on his website Monday, Mr. Icahn said it
has become "abundantly clear" in talks with AIG Chief Executive
Peter Hancock that he isn't willing to "sincerely consider" the
breakup idea.
Mr. Icahn said his consent solicitation may include a proposal
to add a new director who would agree in advance to succeed Mr.
Hancock as CEO if asked by the board to do so.
A representative for AIG wasn't immediately available for
comment. The company has previously said it is already on course to
simplify its operations and reduce risk.
Mr. Icahn's share count is worth $2.61 billion as of Friday's
close and would give him about a 3.4% stake at AIG, making him the
fifth-largest shareholder, according to FactSet data.
AIG is one of the world's biggest insurance companies, with a
market value of about $77 billion. The company nearly collapsed in
2008 after taking on enormous amounts of exposure to securities
linked to subprime mortgages. It was bailed out by U.S. taxpayers
and took until late 2012 to repay the nearly $185 billion in aid,
selling nearly 30 businesses totaling more than $90 billion in
assets. At one point, the government owned about 90% of the
company.
Since making his breakup proposal public, the billionaire
investor said many large institutional shareholders and analysts
have expressed their support for his views. He also said Mr.
Hancock has failed to lay out any alternative strategic plan with
the potential to unlock value for shareholders.
Financier John Paulson has made a similar push to encourage AIG
to split. He bought into the company earlier this year and held
14.6 million shares, or just over a 1% stake, as of Sept. 30.
In Monday's letter, Mr. Icahn pointed to his previous success
instigating change at companies--including Texaco, RJR Nabisco,
Kerr-McGee, Time Warner, Motorola, ImClone, eBay and Forest
Labs--but noted boards are typically hesitant to heed advice.
"AIG is too important, and the current situation is too
time-sensitive, to wait years," he said. "In fact, we believe the
current situation is too time-sensitive to even wait until the
company's annual meeting next spring, especially when all of the
stakeholders who have reached out to us believe management's
current plan (or lack thereof) is insufficient."
Specifically, Mr. Icahn has called for the global insurer to
separate both its life and mortgage insurance units from its core
property-and-casualty business, and embark on a cost control
program.
AIG shares edged up 0.5% and are up 12% so far this year.
Write to Anne Steele at Anne.Steele@wsj.com
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(END) Dow Jones Newswires
November 23, 2015 10:16 ET (15:16 GMT)
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