AIG To Purchase SunAmerica For $18 Billion

American International Group Inc. is buying SunAmerica Inc., a Los Angeles retirement savings and investment-based financial firm. The purchase price is reported to be about $18 billion, payable in stock. The agreement is yet another in a string of financial services and insurance company pacts and another in a string of AIG acquisitions.

The boards of the two companies have agreed to the deal, which is subject to shareholder and regulatory approvals. Under the deal, SunAmerica headquarters will remain in Los Angeles, and the firm will keep its current management and identity. Two AIG board seats reportedly will go to SunAmerica senior execs.

M.R. "Hank" Greenberg, AIG chairman and CEO, says the deal positions AIG in a major market where it has not been well represented. Greenberg says he plans to use AIG's worldwide network to market SunAmerica products. "There will be immediate financial benefits, but the real upside will come from our position as the dominant player in the worldwide retirement savings market in the years ahead,'' he said.

Under terms of the deal, each SunAmerica share will be exchanged for 0.855 share of AIG. At Wednesday's closing stock price of $94.625 a share for AIG that would mean each SunAmerica share would be exchanged for stock worth $80.90 a share. That would be a 26 percent premium over SunAmerica's New York Stock Exchange closing price Wednesday of $64.25 a share.