Business & Finance
Business and Finance
Business and Finance
Tue, October 26, 2010 American International Group, Prudential, MetLife, Prudential Financial and Pfizer
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: American International Group Inc. (NYSE: [ AIG ]), Prudential plc (NYSE: [ PUK ]), MetLife Inc. (NYSE: [ MET ]), Prudential Financial Inc.( NYSE: [ PRU ]) and Pfizer Inc. (NYSE: [ PFE ]).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=4579 ]
Here are highlights from Mondaya™s Analyst Blog:
AIGa™s AIA IPO Raises $17.9 Billion
On the back of strong demand and good positioning in the market, the American International Group Inc. (NYSE: [ AIG ]) has raised $17.9 billion, as the company vended off the 58.4% stake in its Asian life-insurance unit, American International Assurance Group Ltd. (AIA) by offering 7.03 billion shares priced at HKD19.68 ($2.53) each.
However, if the underwriters exercise the over-allotment option, the IPO size would rise 15% to $20.5 billion. Also, AIG is holding the remaining 41.6% stake that would drop to 33%, if it exercises an option to issue more shares. AIG is subject to a lock-in period of 6 months and must hold at least a 30% stake in AIA for a year, post-listing.
AIG plans to utilize the sale proceeds of AIA to repay some of the US government bailout loan, which it had taken at the time of the financial crisis. As of the end of June, AIG owed the US government more than $100 billion.
Currently, AIA is valued at $30.5 billion and its shares are expected to start trading on October 29 on the Hong Kong Stock Exchange. AIA has wholly-owned entities in China, Indonesia, Malaysia, Thailand and Vietnam and more than 300,000 agents in Asia.
AIG has forecasted operating pre-tax earnings of about $2 billion for AIAa™s fiscal 2010 ending this November. However, AIA is not expected to pay out dividends until the second half of 2011, as laid out in its prospectus.
Given its large market share and higher operating experience in the Asian region, we believe that the operating profit projection could eventually be achievable.
AIA went public after AIGa™s plans of disposing it to Britain's Prudential plc (NYSE: [ PUK ]) for $35.5 billion in May was abandoned. The deal fell through as AIG declined accepting Prudentiala™s lower offer of $30.4 billion.
AIG had also vended off its American life insurance unit, ALICO to MetLife Inc. (NYSE: MET) for $15.5 billion (deal to be closed in November 2010) and it also agreed to sell off its two Japanese life assurance subsidiaries, AIG Star Life Insurance Co. and AIG Edison Insurance Co., to U.S.-based insurance group, Prudential Financial Inc.( NYSE: [ PRU ]), for $4.8 billion.
AIG has been attempting to sell off its business in order to repay the bailout money and free itself from pay restrictions. These actions will also result in streamlining AIGa™s operations and the debt reduction will strengthen its balance sheet and ratings.
AIA IPO proceeds are also expected to increase the book value of AIG, given the capital gain from the sale. Going forward, we believe that AIG will now have to stand on its own feet once again, while maintaining ample liquidity and re-establishing itself in the industry. This is also important to restore shareholder confidence.
However, we continue to remain cautious of the large amount of intangible assets on AIG's balance sheet. Moreover, it also remains highly crucial for AIG to manage its already high debt, especially from the government bailout loan.
Pfizer Boosts Presence in Brazil
Pfizer Inc. (NYSE: [ PFE ]) continues to expand its presence in emerging markets. The company recently announced its intention to acquire a 40% stake in Brazilian generic drugs company, Laboratorio Teuto Brasileiro S.A.
Terms of the Deal
Pfizer will make an upfront payment of approximately $240 million. The company could also make a performance-based milestone payment. Besides this, the company could acquire the balance 60% of Teuto beginning in 2014. Teutoa™s shareholders could exercise an option to sell their shares to Pfizer from 2015.
Once the partnership deal is in place, Pfizer will not only gain access to Teutoa™s portfolio of more than 250 products, it will also have access to Teutoa™s distribution networks in rural and suburban areas of Brazil. Teutoa™s products target a wide range of therapeutic areas including pain and inflammation, cardiovascular, anti-infectives, central nervous system and respiratory. Pfizer will also have the right to register and commercialize Teutoa™s products outside Brazil under its own brand.
Meanwhile, Teuto will have the right to commercialize certain products of Pfizer under its own brand in Brazil.
Generics Market Offers Significant Potential
This deal, which is scheduled to close in the fourth quarter, is in-line with Pfizera™s aim of strengthening its presence in emerging markets. The global generics market, which was estimated to be worth $750 billion in 2008, is expected to grow to $920 billion by 2013. A major part of this growth is expected from emerging markets. Brazil is one of the six priority markets in the company's Emerging Markets Business Unit.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=5514 ].
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: [ http://at.zacks.com/?id=5516 ]
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at [ http://at.zacks.com/?id=4580 ].
Visit [ http://www.zacks.com/performance ] for information about the performance numbers displayed in this press release.
Follow us on Twitter: [ http://twitter.com/zacksresearch ]
Join us on Facebook: [ http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts ]
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
