American International Group is buying SunAmerica Inc. in a stock swap valued at about $18 billion, or about $81 a share.
The proposed merger unites two insurance behemoths and continues a trend of consolidation in the financial services industry.
SunAmerica stockholders will receive 0.855 shares of AIG stock for each SAI share they own. Los Angeles-based SunAmerica will continue to operate as a separate company at its current headquarters and retain its management.
The deal sets a significant premium for SunAmerica's shares. Sun shares advanced 7 1/2 to 71 3/4 while shares of AIG declined 7 1/8 to 87 1/2.
"This transaction positions AIG in a major market where we have not been well-represented, and will enable AIG, through our unsurpassed global network to, to introduce SunAmerica's retirement products into world markets where the need for retirement products is growing rapidly," said M.R. Greenberg, AIG's chairman and chief executive, in a statement.
The companies said they expect the transaction to be completed by the end of 1998 or early in 1999.
Written By Stephanie O'Brien