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By making an offer before actually claiming rights over the name he pretty much shot himself in the foot.
Tell him that, to the best of your knowledge, the domain name is generic and doesn't infringe any trademark, that his threats sound like reverse domain hijacking, a practice of unseating domain name registrants by accusing them of violating weak or non-existent trademarks. Finally ask him to provide proof of his identity and his (alleged) rights over the name through traditional channels (rather than threatened you through Sedo)..
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