Boston, MA 05/15/2014 (wallstreetpr) – The global insurance company American International Group Inc (NYSE:AIG) has announced the sale of its aircraft leasing business to a Netherlands-based company. The company realized a total of $7.6 billion in proceeds from the sale of the asset.
The asset, International Lease Finance Corp (ILFC), was transacted in cash and stock deal with AerCap Holdings. The sale of the business marks the end of a long and challenging journey for AIG to divest the business that was no longer adding value to its operations.
The company received $3 billion in cash after closing the transaction. But that was reduced to $2.4 billion because of the settlement of intercompany loans. The balance of the deal amount will be settled in common stock of AerCap. The companies agreed to the transfer of 97.6 million common stock of AerCap to American International Group Inc (NYSE:AIG).
The closure of the deal was announced Wednesday. The development comes as a windfall for AIG and a portfolio boost for AerCap. Netherlands-based AerCap acquires aircrafts and rents them to airline carriers, and it expects its acquisition to ILFC to expand its customer base besides raising its industry ranking.
American International Group Inc (NYSE:AIG)’s attempt to sell ILFC in December 2012 hit a snag after the company failed to reach a deal with a group of Chinese-based investors for $4.7 billion. Back then the company intended to sell 90 percent stake in the business.
American International Group Inc (NYSE:AIG) has dropped several non-core assets from its portfolio in the past few years. The company intends to remove unwanted assets from its portfolio to create a lean and profitable business with simplified operations. Streamlining is widespread across the company’s segments, undoing years of empire building.
The company reported its 1Q2014 financial results on May 5, whereby it earned $1.21 per share, beating consensus estimate of $1.05. However, revenue fell below the expected figure at $8.23 billion against the consensus estimate of $9.35 billion. The decline in revenue was linked to the ongoing sale of assets as the company pursues simplified business.