March 25, 2023

Common Sense: Waiting to Woo Vodafone, and Paying the Price

Yet Verizon shareholders seem to have taken the price in stride, even though it is $30 billion more than was rumored just a few months ago. Verizon shares are about the same as they were before rumors of the deal surfaced last week, even though the share price of the acquiring company usually drops. But consider the math: if 45 percent of Verizon Wireless is really worth $130 billion, then Verizon’s 55 percent stake alone should be worth $159 billion. Yet the enterprise value of all of Verizon, including its debt, was $176 billion this week.

That suggests Verizon is overpaying. And the staggering price also raises other questions: Why did Verizon wait so long to buy the rest of the wireless company? Why now? And why did it ever put its crown jewel, wireless assets, into a joint venture to begin with?

“I was advocating that we buy out Vodafone from Day 1,” Dennis Strigl, the former chief executive of Verizon Wireless, told me this week. “The whole issue for us was there was never a better time to buy than the year before. We just kept building more value and, therefore, a higher price. I wish we’d bought it in 2001.”

And Verizon could have bought it for even cheaper in 1999, when Vodafone outbid Bell Atlantic for AirTouch Communications, the company that provided the assets for Vodafone’s stake in Verizon Wireless. AirTouch would have given Bell Atlantic, which later emerged as Verizon Communications, a nationwide cellular footprint to compete with ATT, since Bell Atlantic at the time served New York and much of the East Coast, and AirTouch covered California and the West. (AirTouch itself resulted from a combination of the wireless assets of the former Bell operating companies Pacific Telesis and US West.)

According to Mr. Strigl, Verizon’s strategy was always to create a coast-to-coast network. To compete with ATT’s then-popular nationwide calling plan, Verizon started paying its customers’ roaming charges in areas where it did not offer service. “That wasn’t sustainable,” Mr. Strigl said.

But Bell Atlantic dropped out of the AirTouch bidding at $45 billion — $85 billion less than it is now paying just for AirTouch’s former cellular assets in the United States. (Air Touch also owned extensive international assets that were not part of the Verizon Wireless venture.) Vodafone, based in Britain, snagged the company for $62 billion, in what will now be seen as one of the best deals ever.

Of course, it is easy to say with the benefit of hindsight that Verizon missed the opportunity of a lifetime when it let AirTouch slip from its grasp. In 1999, the year of that deal, cellular service was erratic, cellphones were clumsy and mostly limited to voice calls, and customers were coping with roaming charges by turning off their phones except when making calls.

Vodafone’s chief executive then, Christopher Gent, now looks like a visionary. But he was criticized at the time for overpaying for AirTouch (and other acquisitions that transformed Vodafone into a global giant) and was excoriated in the British news media in 2003 for his £10.4 million pension. (Mr. Gent is now chairman of the pharmaceutical giant GlaxoSmithKline and a senior adviser at Bain Company.)

According to an investment banker working on the deal at the time (who did not want to be named because he is involved in the current deal as well), Verizon may have underestimated Vodafone’s determination to hold on to the wireless assets because it thought Vodafone was mostly interested in AirTouch’s international assets. “We did bid, but they didn’t want to sell,” Mr. Strigl said. “At least, they didn’t want to sell except at a very high price.”

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Ryanair May Have to Divest Aer Lingus Shares

The finding is the latest setback for Ryanair, Europe’s largest airline by number of passengers, in its thorny relationship with Aer Lingus, which it has sought, unsuccessfully, to acquire since first building up a nearly 30 percent stake in 2006.

In a statement, Britain’s Competition Commission said it had concluded that Ryanair’s shareholding had been a significant obstacle to Aer Lingus’s ability to merge or partner with other airlines, limiting Aer Lingus’s strategic options as it seeks to remain competitive amid a recent wave of consolidation across the European airline industry.

The regulator found that the stake also gave Ryanair sufficient influence to block efforts by Aer Lingus to raise new capital or to dispose of valuable takeoff and landing slots at London’s Heathrow Airport.

While the stake was not found to give Ryanair day-to-day control over its rival, it ‘’can influence the major strategic decisions that could be crucial to Aer Lingus’s future as a competitive airline,’’ especially on high-traffic routes between Dublin and London, Simon Polito, the commission’s deputy chairman who led the inquiry, said in a statement.

‘’We were particularly concerned about Ryanair’s influence over Aer Lingus’s ability to be acquired by, merge with, or acquire another airline,’’ Mr. Polito said. ‘’We thought it likely that such a combination would be necessary to increase Aer Lingus’s scale and achieve synergies to allow it to remain competitive in future.’’

The British regulator said it would solicit responses from interested parties to its preliminary ruling and proposed remedies, which include the sale of all or part of Ryanair’s stake, before making a final decision in the matter by July 11.

Ryanair’s chief executive, Michael O’Leary, called the ruling ‘’bizarre and manifestly wrong’’ and vowed to appeal in British court any final decision that imposed what he called ‘’unlawful remedies.’’

Ryanair has made three unsolicited offers in the past six years for Aer Lingus, which is also 25 percent owned by the Irish government. The Irish government has repeatedly expressed its interest in divesting its shares, but has held off in the fear that they could be snapped up by Ryanair or another proxy investor. Ryanair and Aer Lingus already control 70 percent of Irish air traffic, and the Irish government says a combination would leave Ireland, an island nation, too dependent on one operator for vital air links abroad.

The European Commission blocked Ryanair’s latest bid for Aer Lingus, worth nearly 700 million euros, or $900 million, in February after a six-month review. European regulators found that concessions and remedies proposed by Ryanair, which included offers to sell dozens of routes between Ireland, Britain and continental Europe, did not go far enough to allay antitrust concerns.

Ryanair has appealed the commission’s decision to the European Court of Justice, a process that could drag on for years. The airline argued Thursday that any remedies that were ultimately ordered by British regulators could not be implemented before a ruling by the European court in the merger case.

Ryanair has sought, unsuccessfully, to challenge the British commission’s jurisdiction to investigate its Aer Lingus stake since the case was referred to it last year by Britain’s Office of Fair Trading, arguing that the European review of its takeover bid should preclude any separate competition inquiry by an individual member state. A British appeals court rejected that claim in December, saying that as a member of the European Union, Britain had a ‘’duty of sincere cooperation’’ with Brussels to continue its investigation, regardless of the fact that the two airlines are based in Ireland.

Following Europe’s rejection of the takeover, Britain’s Supreme Court in April refused Ryanair permission to further appeal Britain’s right to investigate.

The scope of the British investigation is limited to a review of the impact of Ryanair’s existing stake in Aer Lingus, not a prospective merger.

Aer Lingus said Thursday that it welcomed the British commission’s initial findings and that it would continue to assist in the investigation.

Ryanair contends that the competitive landscape in European air travel has changed significantly, particularly since the global financial crisis and subsequent European economic slowdown has driven traditional network carriers to offer more low-cost options to passengers. The budget carrier points to the approval of a series of big airline mergers in recent years, including that of British Airways and Iberia of Spain to form International Airlines Group in 2010, and that group’s subsequent acquisition of British Midland International in late 2011.

Mr. Polito of the British competition commission acknowledged Thursday that competition between Ryanair and Aer Lingus had intensified on routes between Britain and Ireland in recent years, but he argued that it might have been more vigorous without Ryanair’s shareholding, adding that future competition could also be restricted by Ryanair’s conflict of interests.

‘’Aer Lingus needs to be free to take any actions that will strengthen its position in the future,’’ Mr. Polito said.

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French Automakers’ Biggest Problem? French Consumers

Down the avenue at the Renault showroom, business was hardly brisker. Only at the nearby Mercedes-Benz showroom, displaying German automotive arts, was there much sign of life.

The dormant French dealerships signify the main problem facing this country’s auto industry: Consumers in France do not seem very interested in French cars. Or any cars at all, in many cases.

In France, vehicle sales last year were the lowest in 15 years, falling below 1.9 million from a 2009 peak of 2.3 million, according to Georges Dieng, an analyst at Natixis Securities. And even those who are prospective buyers often prefer non-French makes.

Esther Cintract, 40, a banker who takes the Métro to commute into Paris, owns a 10-year-old Citroën. For her next car, she said, she would look at switching to a German model: a Volkswagen, a BMW or a Mercedes.

But many younger French people have other priorities. “I’ve never had a car,” said Jean-Victor Mareschal, 30, who works at a bookstore in Paris. “I don’t need one. I ride a bike, walk, or take the Métro.”

In contrast to the United States, where carmakers had a bumper year in 2012, France’s 2012 sales fell by 13.9 percent, outpacing the 8.2 percent decline in the overall European market, according to the European Automobile Manufacturers’ Association. Industry officials expect another gloomy year in 2013.

Consumers’ flagging appetite is a significant economic problem for France. Its auto industry, dominated by Citroën’s parent, PSA Peugeot Citroën, and Renault, directly employs about 220,000 people; thousands more jobs depend on it indirectly. The government, which owns a 15 percent stake in Renault, has identified the sector as a strategic priority, and plays an active role in — some might say actively meddles in — the industry’s affairs.

The downturn is not France’s alone. In 2007, before the onset of the global financial crisis that merged into the current euro zone economic slump, the overall European market peaked at just under 16 million newly registered vehicles. Last year, the figure had fallen to just over 12 million, according to the European Automobile Manufacturers’ Association.

Wherever the market ultimately bottoms out, French automakers, like many European manufacturers, have more factory capacity and workers than they can profitably use. And that may be the case for years to come — especially in France, where the job-cutting plans announced so far by Renault and PSA Peugeot Citroën have been criticized by many analysts as insufficiently daring, even as they encounter fierce resistance from workers and, in some cases, government officials.

But it is a showdown that appears to be increasingly unrelated to the French market’s demands.

Philippe Houchois, head of European auto industry research at UBS in London, noted that most vehicle purchases in the developed world over the last five years had been to replace older cars, with only 2 percent of car sales in the United States and Europe representing net additions to those regions’ consumer fleets. In emerging markets, by contrast, 70 percent of new car sales represented additions to the total stock, Mr. Houchois said.

But even replacement demand is under threat in Europe. As the population ages, car owners drive less, reducing wear on their vehicles. And today’s cars last much longer than was the case just a few decades ago.

Generational change also bodes ill for the industry. Carmakers can be confident that many of those who adopt the car-based lifestyle early will stick with it for life. But the younger customers the industry covets are less interested in driving than they used to be — particularly, it seems, in France and especially in trend-setting Paris.

“In my parents’ generation, pretty much everyone drives,” said Mr. Mareschal, the bookstore employee. “With my generation, it’s a lot less important. I’m not anti-car, but it’s something I just don’t care about.”

Being able to go without a car may seem like a luxury available mainly to city dwellers, but even outside the cities, interest in auto ownership seems to have flagged.

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DealBook: Generali to Buy Stake in Joint Venture for $3.3 Billion

LONDON – The biggest Italian insurer, Assicurazioni Generali, agreed on Tuesday to buy the remaining stake in an East European joint venture that it did not already own, as part of a strategy to expand in faster-growing emerging European markets.

Under the terms of the deal reached with the European private equity firm PPF Group, Generali will pay 2.5 billion euros ($3.3 billion) to acquire a 49 percent holding in GPH, a joint venture formed in 2007.

The deal will take place in two stages. Generali will buy a 25 percent stake in GPH for 1.29 billion euros by March, and acquire the remaining 24 percent at the end of 2014, according to a statement from Generali.

Despite Europe’s financial problems, many countries in Central and Eastern Europe have continued to grow, and the region now represents the fourth-largest market for Generali behind Italy, France and Germany, the company said.

“This transaction eliminates all uncertainty over our development strategy in Central and Eastern Europe,” Generali’s chief executive, Mario Greco, said in a statement.

Mr. Greco was appointed head of Generali last year after its former chief executive, Giovanni Perissinotto, was ousted because of the company’s poor share price performance. Mr. Greco, a former McKinsey consultant, has been given the task of turning around Generali’s fortunes. The deal for GPH represents his first major move in pursuit of that goal.

Shares in Generali rose 1.25 percent in afternoon trading in Milan on Tuesday.

The deal with the PPF Group also includes an asset swap, in which Generali will take control of a 38 percent stake in the Russian insurer Ingosstrakh, and the PPF Group will acquire Generali’s ownership in two private equity funds. PPF also said it would buy GPH’s insurance businesses in Russia, Ukraine, Belarus and Kazakhstan for 80 million euros.

Generali said it would finance the first phase of the GPH acquisition from the proceeds of a recently raised 30-year bond issuance.

Goldman Sachs advised Generali on the deal.

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You’re the Boss Blog: The Queen of QVC Talks About the Risks of Dealing With Sharks

Searching for Capital

A broker assesses the small-business lending market.

Lori Greiner: The Queen of QVC Lori Greiner: The Queen of QVC

A few weeks ago, I wrote a post about the popular reality show “Shark Tank” in which I discussed two entrepreneurs who decided not to participate because the producers insisted on taking a 5-percent stake in their company in exchange for the appearance.

As a follow-up, I recently had the chance to sit down with Lori Greiner, a k a the Queen of QVC, who recently made her debut as a full-time shark. We enjoyed a wide-ranging conversation — which has been condensed and edited below — about her hits and misses, the pros and cons of how entrepreneurs raise capital, and the lessons of  “Shark Tank.”

Every Friday night, millions of Americans of all ages sit down and watch the show, which encourages the belief that when a smart entrepreneur connects with a wealthy investor, the potential is unlimited. And sometimes it is. But when entrepreneurs and the investors enter into a contract, all parties need to think carefully about what the relationship means today — and what it will mean in the future. For example, did you realize that if you take on an investor, you might not be able to get a bank loan unless your investor guarantees the loan personally? I think that’s an important consideration for both investors and entrepreneurs.

Why do you think “Shark Tank” is so successful?

In a down economy, a time where people are feeling that things are difficult, hopeless, they’re worried they might lose their job, they tune in to Shark Tank, and they learn about how to possibly become their own boss.

Do you think the show could do a better job of teaching about entrepreneurship?

Well, I think the show is what it is, and I think it has a great formula that people enjoy. And I do hear all the time from students in colleges across the country that “Shark Tank” is shown in their business classes.

Can you share some of your “Shark Tank” lessons?

Yes, well, my Reader Rest was wildly successful. I think it’s the most successful product ever in “Shark Tank’s” history. It’s the magnetic glasses holder. We’ve gone well over 3 million in sales to date in less than a year.

Are there deals that you’ve made on the show that haven’t actually materialized into an investment?

Yes, there were a few. I was very disappointed about one of them, the Wine Balloon. I thought it was a great product, but he just wasn’t interested in moving forward.

So sometimes the deals break down in negotiations, or something changes in the product or in due diligence?

Well, sometimes in due diligence you find out things they didn’t say in those minutes in front of you, so you can be disappointed or surprised by things. But so far for me I haven’t had that issue beyond the Wine Balloon.

If you were starting a company, would you give away 5 percent of it in exchange for being on “Shark Tank?”

Yes, I would.

You think its worth it?

I do. To be able to get on “Shark Tank” is a tremendous opportunity, and if that means the difference between jump-starting your career and your idea or going nowhere, 5 percent is definitely worth it.

Do you think it’s a good idea for the entrepreneurs on the show to give away equity — or should some consider debt?

Well, I think the formulation on the show is that you are giving away an equity stake for X amount of dollars. And that’s how the show operates, really.

If you invest in a company and later the company needs a loan for working capital, would you be willing to personally guarantee that loan?

If I’ve invested in a company and they’re doing well, I would be happy to keep investing more money into it.

In exchange for more equity?

It depends on the situation, right? Each different situation with each different deal is different.

We see so many loans today that where any investor who owns 20 percent or more of the company has to  guarantee the loan personally.

Well, I think on “Shark Tank” we always joke that we’re the bank and the tank. People aren’t going to the banks for traditional loans. They’re coming to us. So it’s a different model. Do you follow me?

A lot of entrepreneurs give away equity, and I think there’s a trade off. We always tell them, if you’re going to give away equity and you’re going to give away more than 20 percent of your company, you better make sure that if you’re going to need a loan in the future that your investor will be willing to personally guarantee it. Otherwise, you’re going to have a problem.

I think a lot of people don’t like to personally guarantee loans.

Right, so does that inhibit the company’s ability to grow?


What can the company do?

Well, I can only put this situation for myself where, if I’ve invested and it’s doing well and they need more money, I would put up more money for them.

In exchange for more equity, though, right?

Probably. Its hard for me to answer this because it’s a big hypothetical to me.

Have you ever taken equity or debt for a company that you started?

Honestly, this is a new way for me to operate. For the last 16 years, I’ve created my own products and I’ve helped other budding inventors with their products, and I have not chosen to go the path in taking an equity stake in their company.

Right. This equity stuff gets complicated. But did you ever take investors for your own companies?

No, never.

And did you ever need debt or loans?

I took out a loan with my first product, and that was it. That worked for me.

And you stayed in control, right?


What do you think? If you had the opportunity to take an investment from Ms. Greiner or another Shark, would you consider it?

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

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DealBook: Icahn Bids to Take Control of Oshkosh Truck

A military vehicle passes by the Oshkosh plant in Wisconsin.Darren Hauck/ReutersA military vehicle passes by the Oshkosh plant in Wisconsin.

4:56 p.m. | Updated

Carl C. Icahn escalated his proxy fight with the vehicle maker Oshkosh Corporation on Thursday by offering to take over the company for $32.50 a share, or about $3 billion.

The price represents a 21 percent premium to Oshkosh’s closing price on Wednesday. Mr. Icahn, who has a roughly 10 percent stake in Oshkosh, urged shareholders to accept his bid.

Oshkosh’s shares rose more than 11 percent on Thursday to close at $29.90.

“I strongly believe that Oshkosh needs proactive shareholders to bring a proactive management team together to weather a volatile economy,” Mr. Icahn said in a statement.

“Mismanagement of this company has resulted in a lost decade of shareholder value,” he added.

Carl C. Icahn, the activist investor.Mark Lennihan/Associated PressCarl C. Icahn, the activist investor.

The tender offer is conditioned on Mr. Icahn’s nominees being elected to Oshkosh’s board at the next shareholder meeting. If 40.1 percent of shares accept the offer, bringing Mr. Icahn’s stake above 50 percent, the investor will seek to reschedule the meeting to a sooner date.

Mr. Icahn previously tried to elect directors to Oshkosh’s board at the last shareholder meeting, but wasn’t successful, Oshkosh noted in a statement on Thursday.

Oshkosh advised shareholders on Thursday to take no action in response to the offer. The board plans to announce its position within 10 business days after the offer is official.

The investor has argued that Oshkosh is being weighed down by JLG Industries, which it bought in 2006. JLG, a maker of construction equipment like scissor lifts and booms, should be spun off, Mr. Icahn said on Thursday.

There was speculation after the offer was announced that Mr. Icahn may look to combine Oshkosh with another truck maker, Navistar International. Mr. Icahn has also been pushing for changes at Navistar, and the company agreed this week to install three of his nominees on its board.

But Mr. Icahn dismissed that talk.

“There’s no interest on my part to see them get together,” he said in an interview.

Shareholders of Oshkosh will have 45 days to accept Mr. Icahn’s offer. But that deadline would most likely be extended if the investor got strong support for his plan.

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DealBook: In Buyback Deal, Alibaba Gets Half of Yahoo’s Stake

Jack Ma, chief of the Alibaba Group, addressed the 2011 Netrepreneur Summit in Hangzhou, China.Lang Lang/ReutersJack Ma, chief of the Alibaba Group, addressed the 2011 Netrepreneur Summit in Hangzhou, China.

8:14 p.m. | Updated

Yahoo closed on the sale of half of its stake in the Alibaba Group of China, the company said Tuesday, giving it $3 billion to return to its shareholders.

Some investors had fretted that Yahoo would decide against doling proceeds from the sale to shareholders, after the company’s new chief executive, Marissa Mayer, said last month that she was “reviewing” its business strategy. To some, it suggested that Ms. Mayer, a former Google executive, was more keen to hold onto the money for some other use, including acquisitions.

But it appears that Ms. Mayer has decided that a payout to investors, including the hedge fund manager and Yahoo board member Daniel S. Loeb, who holds about a 6 percent stake, was in the company’s best interest.

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It has already spent $646 million on stock buybacks since May, in what it called a “down payment” to its stockholders.

In selling about 20 percent of Alibaba’s stock back to the company, Yahoo will reap about $7.6 billion before taxes. The $3 billion represents about 85 percent of the net cash proceeds from the sale, with Yahoo also receiving preferred shares in its partner.

The deal, struck in May, is part of a comprehensive agreement worked out between Alibaba and Yahoo, beginning the transformation of a partnership that has often proved contentious.

The two companies’ alliance began when Yahoo bought a 40 percent stake in Alibaba in late 2005. But as Yahoo began to falter, falling behind newer rivals like Google and then Facebook, its stake in Alibaba leapt in value.

As of Tuesday afternoon, Yahoo’s remaining stake in Alibaba was valued at about $8.1 billion, representing about 43 percent of the American company’s $18.9 billion market value.

Over the last few years, both sides have engaged in on-again, off-again talks about the return of that stake.

Under the terms of the agreement, Yahoo will sell half of its stake back now. It will sell an additional 10 percent of Alibaba when the Chinese Internet company files to go public in the next few years, and then divest the remainder sometime after that.

For Alibaba, Tuesday’s announcement is the biggest step yet toward its long-held goal of regaining full control of its future. Still privately held, it has taken a number of steps toward becoming publicly traded, including finally striking a deal with Yahoo.

Alibaba has spent the last several months crisscrossing the world, raising the requisite financing for the stock buyback from investors like the China Investment Corporation, the Chinese private equity firms Boyu Capital and Citic Capital and the China Development Bank. Existing investors like Silver Lake, DST Global and Temasek also participated.

And it arranged $2 billion in financing from a number of international banks.

“The completion of this transaction begins a new chapter in our relationship with Yahoo,” Jack Ma, Alibaba’s chairman and chief executive, said in a statement. “We are grateful for Yahoo’s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo.”

Ms. Mayer said in a statement: “This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth.”

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DealBook: A.I.G. Plans to Raise $2 Billion for Share Buyback

The headquarters of A.I.A. Group, American International Group's Asian insurance unit, in Hong Kong.Jerome Favre/Bloomberg NewsThe headquarters of A.I.A. Group, American International Group’s Asian insurance unit, in Hong Kong.

The insurance giant American International Group said on Thursday that it planned to sell a $2 billion stake in its Asian insurance unit as part of a plan to repurchase $5 billion worth of its own stock from the United States government.

The move is the latest effort by A.I.G. to shed assets and repay the government after the firm received a $182 billion bailout in 2008.

A.I.G. has been progressively selling its stake in its Asian insurance business, the A.I.A. Group, since listing the company on the Hong Kong stock exchange in an initial public offering that raised $17.8 billion.

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Under the terms of the deal announced, A.I.G. will offer investors 600 million shares in A.I.A. at 25.75 Hong Kong dollars to 26.75 Hong Kong dollars, according to the term sheet obtained by DealBook.

On the low end, the price represents a 2.1 percent discount to A.I.A.’s closing price in Hong Kong on Thursday; on the high end, it represents a 1.7 percent premium. The deal will leave A.I.G. with a stake of about 13 percent stake in A.I.A.

Robert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government's $182 billion bailout.Yuri Gripas/ReutersRobert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government’s $182 billion bailout.

Earlier this year, A.I.G. sold a $6 billion stake in A.I.A., which is the region’s third-largest insurer.

A.I.G. said on Thursday that it planned to buy as much as $5 billion of its own stock, the third repurchase of its shares this year. A.I.G. added that it would use the proceeds of the A.I.A. share sale, in part, to repurchase its shares.

The Treasury Department has been selling off its stake in A.I.G. Last month, officials said they would sell about $5 billion worth of A.I.G. stock to reduce the government’s holding to around 53 percent, from 92 percent when the firm was first bailed out.

The government’s links with A.I.G. now lie primarily with the Treasury Department’s shares in the insurer. The holdings could prove profitable. The stock is currently trading at almost $35, ahead of the government’s break-even price of $29.

Since receiving a government bailout, A.I.G. has recovered by reinventing itself as a smaller company that largely shies away from the types of complex investments that nearly led to its downfall.

Goldman Sachs and Deutsche Bank are managing the $2 billion share sale for A.I.G.

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DealBook: British Soft Drink Companies in Merger Talks

Fruit Shoot juice drink, manufactured by Britvic.Chris Ratcliffe/Bloomberg NewsFruit Shoot juice drink, manufactured by Britvic.

LONDON – The British beverage company Britvic said on Wednesday that it was in talks with a rival soft drink maker, A.G. Barr, over a potential merger worth around $2.2 billion.

The deal would create one of Europe’s largest soft drink companies under the proposed all-stock merger, which would give a 63 percent stake in the combined company to Britvic shareholders. Investors in A.G. Barr would control the remaining 37 percent stake, according to a company statement.

The two companies said discussions were in early stages. If the deal is completed, A.G. Barr’s chief executive, Roger White, would become the new company’s head. John Gibney, Britvic’s chief financial officer, would become head of finance for the combined company.

Britvic and the smaller A.G. Barr have a combined market capitalization of around $2.2 billion.

Shares in Britvic, which controls the British license for Pepsi and 7UP, jumped 11.9 percent, while stock in A.G. Barr rose 5.6 percent in morning trading in London on Wednesday.

Under British takeover rules, the companies have until the beginning of October to announce whether they will pursue a merger.

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DealBook: CVC Capital Is Said to Have Reduced Its Stake in Formula One

A Ferrari at the 2012 Formula One Grand Prix of Spain.Valdrin Xhemaj/European Pressphoto AgencyA Ferrari at the 2012 Formula One Grand Prix of Spain.

The private equity firm CVC Capital, which owns a controlling stake in the company Formula One, is not taking any chances before the racing company’s proposed $3 billion initial public offering.

Over the last five months, CVC has sold a 21 percent stake in Formula One to three investors for a combined $1.6 billion, according to a person with direct knowledge of the matter.

The combined deals, which value the company at over $7 billion, have reduced CVC Capital’s stake in Formula One to 42 percent, from 63 percent. The sale is part of the private equity firm’s efforts to reduce its risk ahead of Formula One’s I.P.O., the details of which began to be presented to investors on Tuesday.

The buyers include Waddell Reed, the Kansas-based money manager, which paid $1.1 billion at the start of the year for a 13.9 percent stake in Formula One. The investment management firm BlackRock bought a 2.7 percent share in April for $196 million, the person added, who spoke on the condition of anonymity because he was not authorized to speak publicly about the sale.

Norges Bank Investment Management, the Norwegian sovereign wealth fund, bought a 4.2 percent stake from CVC Capital for $300 million.

The motor racing company, which has focused on Asia as a major growth area, intends to set the final pricing of its offering in mid-June and to have its shares begin to trade in Singapore a week later, according to another person with direct knowledge of the matter.

By selling stakes in Formula One to new investors, CVC Capital also hopes to build momentum for other potential buyers for the I.P.O., according to one of the people with direct knowledge of the matter.

Unlike other companies, Formula One has few similar publicly traded sports franchises that can be used to guide investors on the price of its stock offering.

Formula One employs 200 people and last year recorded revenue of 1.17 billion euros ($1.5 billion), according to a statement on CVC’s Web site. The racing teams will meet at the Monaco Grand Prix this week, which is the most important series race of the year for sponsors and for media exposure during the race weekend.

The lead underwriters on the deal are Morgan Stanley, UBS and Goldman Sachs. The Singaporean lender D.B.S., the C.I.M.B. Group of Malaysia and Banco Santander of Spain also are involved.

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