Insurer American International Group accepted a $2.16 billion cash offer for its Taiwan Nan Shan Life unit from a group led by local conglomerate Ruentex, marking the beginning of the end of a drawn-out process fraught with political wrangling.
AIG has been trying to sell the unit for some 15 months as part of its plans to help pay back the US government for its $180 billion bailout, but regulatory issues have dogged the sale process and might yet delay it further.
The buyer group, called Ruen Chen Investment and comprising Ruentex Industries Ltd and shoe maker Pou Chen Corp, signed a deal on Wednesday for the 97.57 per cent of Nan Shan that is for sale.
"Ruen Chen offers strong operational and funding capabilities and possesses a clear ability to satisfy the strict criteria that governed AIG's bid review process," said Robert Benmosche, AIG president and chief executive, in a statement.
AIG had a deal worth $2.15 billion last year blocked by the regulator, citing concerns about the previous bidders' industry experience.
That forced AIG to put the asset back on sale and prompted Mr Benmosche to personally visit the regulators in December to discuss the sale.
Sources have previously said that Ruentex, a major player in the hypermarket business in China and Taiwan, may not meet all of the five criteria the regulator has laid down for a buyer.
Those criteria are that any buyer needs to show fund-raising ability for future operations, a long-term commitment to run Nan Shan, experience in running an insurance business, and must promise to take care of employees and policy holders. It must have funding sources that meet Taiwan regulations.
Ruentex chairman Samuel Yin has owned and run insurance and asset management businesses in the past, but has since sold them at a profit. The regulator, seeking a long-term stable owner, in general does not approve of buying assets just for resale.
The Financial Supervisory Commission, the financial regulator, said in a separate statement that AIG had communicated its choice of buyer in advance and "should understand the FCS's position".
AIG moved to address concerns about the regulatory outlook, saying in its statement that the deal includes a number of commitments, including an agreement to maintain existing compensation and benefits packages for employees and the existing organisational and commission structure.
At a later media briefing it hinted at higher salaries in future and the possibility of employee share ownership.
Buyer group head Mr Yin told the briefing that it would consider a public share offer for Nan Shan and promised not to sell the business for 10 years. Regulators have in the past suggested to AIG that it sell shares in Nan Shan.
Reuters