Erst wer stolpert achtet auf den Weg
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Jun. 20, 2014 1:23 PM ET | About: American International Group Inc (AIG)
Robert Benmosche, CEO of AIG (AIG) was confident that the sale of International Lease Finance Corporation (ILFC) to AerCap Holdings N.V. (AER) would close:
We're very confident that this transaction will in fact close in the second quarter.
His confidence was well placed. On May 14, 2014 AIG announced it had completed the sale [Source] for $3.0 billion of cash and 97,560,976 newly issued AerCap common shares for a total of approximately U.S. $7.6 billion based on the price of AerCap's shares. AIG will own a 46% stake in AerCap subject to a lock-up which expires over 9-15 months following the closing date. This last major divestiture of AIG's noncore holdings was a four year challenge for the company.
Share Buybacks Resume in Earnest:
Then on June 5, 2014 AIG announced that its Board of Directors authorized the repurchase of an additional $2.0 billion of AIG Common Stock. Since the end of the Q1 2014 AIG had already repurchased $418 million of shares. The remaining share repurchase authorization including the recently announced authorization is approximately $2.1 billion as of June 5.
During Q1 the more aggressive share repurchases were a welcome surprise. This coupled with the continued purchases after the quarter and the new authorization is a positive development and a sign of shareholder friendly capital management. At the current share price of about $54, the equity dollars spent on share repurchases buys AIG assets worth $71.77 for each share purchased. That's a 33% return on those equity dollars invested and quite an improvement over the 6.5-7.5% return on equity (ROE) currently being earned from the businesses.
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