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NEWARK, N.J. (Bloomberg)—Prudential Financial Inc., the second-biggest U.S. life insurer, sold stock at $54.50 a share, below Thursday's closing price, to raise about $1 billion and help pay for two units from American International Group Inc.
Prudential sold more than 18.3 million shares, according to data compiled by Bloomberg. The insurer slipped to $55 in early trading at 8:56 a.m., from Thursday's close of $55.02 on the New York Stock Exchange.
Prudential agreed Sept. 30 to buy AIG Star Life Insurance Co. and AIG Edison Life Insurance Co., two Japanese businesses, for $4.8 billion. The Newark, N.J.-based insurer previously said it would pay for the units with $1.7 billion of capital and sales of $1.3 billion of equity and $1.2 billion of debt. It announced Nov. 3 that it would reduce the stock and bond sales to $1 billion each and use $2.2 billion of cash.
“Our just-announced acquisition of Star, Edison insurance companies fulfills the criteria of a successful deal,” said CEO John Strangfeld in a conference call after third-quarter earnings were released. The purchase should provide cash to “support shareholder dividends, potential acquisitions and other activities.”
Higher dividend
Prudential said on Tuesday that it will boost its annual dividend 64%, to $1.15 a share, the highest since 2007. The $4.8 billion purchase price also includes the assumption of about $600 million in debt. Prudential has risen about 11% this year through Thursday, compared with a 17% rise in the 24-company KBW Insurance Index.
Underwriters have the option of buying an additional 2.75 million shares over 30 days, Prudential said in a statement late Thursday. Citigroup Inc., Bank of America Corp., UBS A.G. and Barclays P.L.C. are among firms that managed the offering.
MetLife Inc., the biggest U.S. life insurer, sold more than $6 billion in stock and notes in August to help pay for its $16.2 billion purchase of AIG’s American Life Insurance Co. AIG is divesting assets to help repay a $182.3 billion U.S. bailout.
Copyright 2010 Bloomberg
NEW YORK (Bloomberg)—American International Group Inc. may reach a deal as soon as Wednesday to sell two Japanese life insurance units to Prudential Financial Inc. for about $4.8 billion in cash, said people with knowledge of the matter.