American International Group Inc. announced an agreement yesterday to sell two Bangkok, Thailand units, AIG Retail Bank Public Company Ltd. and AIG Card Company Limited, for U.S. $58.7 million (2.055 billion Baht) to Thailand's Bank of Ayudhya Public Company Ltd. (BAY).
AIG said the transaction, subject to the approval of the Bank of Thailand and BAY's shareholders, is expected to be completed in April.
Under the terms of the agreement, BAY will acquire 99.5 percent of the shares of AIG Retail Bank and 100 percent of AIG Card (Thailand) for a total consideration of (subject to closing valuation adjustment).
In addition, intercompany loans totaling $477 million from AIG will be repaid at closing.
AIG said combined assets of the two companies are expected to increase BAY's assets by approximately 32 billion Baht ($914 million), which brings its current assets from approximately 745 billion Baht ($21.3 billion) to 777 billion Baht ($22.2) billion.
The New York conglomerate said the transaction will increase BAY's retail loans by 14 percent and approximately 220,000 credit cards in force.
A statement from Tan Kong Khoon, BAY president and chief executive officer, said, "The acquisition of AIG Retail Bank and AIG Card Thailand emphasizes Bank of Ayudhya's strategy in its inorganic growth plan."
He said the transaction will add 14 percent to BAY's retail portfolio, bringing the bank's retail loan portion to 36 percent. BAY is currently Thailand' fifth largest commercial bank in terms of assets.
AIG Retail Bank and AIG Card customers, Mr. Khoon said, "will benefit from an easy access to one-stop financial services and a wide range of consumer financial solutions offered by BAY."
AIG Retail Bank President and CEO Charly Madan said, "AIG Retail Bank is an institution of the highest quality. We believe this outcome serves the best interests of both companies, as well as our valued customers, who we are confident will benefit from Bank of Ayudhya's financial strength, comprehensive distribution network and extended product lines."
AIG said financial advice for the sale was provided by Blackstone Advisory Services. Deutsche Bank acted as financial advisor and Linklaters served as legal counsel. Phatra Securities acted as financial advisor and Allen & Overy (Thailand) served as legal counsel to Bank of Ayudhya.
The transaction is the latest AIG sale as the financially troubled company divests itself of assets to pay off billions in government loans it has needed to stay afloat.
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