% | $
Quotes you view appear here for quick access.

American Express Company Message Board

  • Novalis_97 Novalis_97 Apr 26, 1998 10:50 PM Flag

    London Daily Telegraph article

    Amex holds merger talks with AIG
    By Patrick Weever; Sunday, April 26, 1998

    AMERICAN Express is believed to be in merger discussions with American International Group (AIG), America's most profitable insurer, to create a new financial services giant.

    American Express is valued at $47.9bn and AIG at $96.7bn. If the deal goes through the company will be one of the world's largest. Harvey Golub, American Express chief executive, is known to have held extensive discussions with Citicorp last year but the talks broke down over the allocation of top jobs. This month Citicorp merged with Travelers Group.

    American Express has been a comeback story under Golub. He took over just as its last costly attempt to create a financial services supermarket through a merger with Shearson Lehman was being dismantled. He disposed of businesses in stockbroking, insurance and publishing, leaving a company focused on credit cards, travel services and financial advisers.

    While Amex's share of the credit card market has continued to fall, Golub's decision to fight back with an array of cards with different commercial partners has helped. But Amex, which disclosed $233m pre-tax provisions for losses in the Asia-Pacific region, knows that it will be a bid target if it does not make a merger move.

    AIG, though headquartered in Manhattan, was born in Shanghai and is still the biggest insurer in most Asian countries. The company is tightly run and has had only two chief executives in 79 years. The chairman and chief executive, Maurice "Hank" Greenberg, has been in the job since 1968 and is now in his 70s.

    Greenberg has been a controversial figure who has always insisted that AIG make a profit on underwriting. Most American companies
    make losses, often big losses, but make up for it with investment profits. This has meant that he has ruthlessly pruned lines of business offering high volume but low margins such as car insurance and workers' compensation. In America the company focuses on the commercial and industrial market.

63.42-0.43(-0.67%)Sep 26 4:00 PMEDT