World News – CA – American Equity opts for partnership with Brookfield, cancels $ 3 billion takeover

As part of the partnership, Brookfield will acquire a 19% stake in the insurer for approximately US $ 37 per share

American Equity Investment Life Holding Co has confirmed its intention to launch a new partnership with Brookfield Asset Management Inc after rejecting a US $ 3 billion buyout proposal from Athene Holding Ltd and Massachusetts Mutual Life Insurance Co

American Equity said in a statement that as part of the partnership, Brookfield will acquire a 19% stake in the insurer for around US $ 37, or a 15% premium on the location where its shares closed Brookfield on Friday. will also serve on American Equity’s board of directors in connection with the arrangement, the companies said in separate statements, confirming an earlier Bloomberg News report

“This compelling strategic transaction, which we have been discussing with Brookfield since March, demonstrates the substantial shareholder value we are creating through the execution of our AEL 20 strategy,” said Anant Bhalla, CEO of American Equity, in the press release

American Equity also officially rejected a proposed buyout at $ 36 per share of Athene and MassMutual on the grounds that it undervalues ​​the company and is opportunistic American Equity has said it believes that its current strategy will maximize long-term shareholder value

« The board of directors and shareholders of American Equity will have to decide what is in the best interests of the company, » a representative for Athene said in a statement Athene’s joint cash proposal with MassMutual represents a significant bonus for shareholders and provides continuity for American Equity shareholders, statement says Following the decision, Athene will continue to execute its autonomous strategy, he said

U.S. stocks on Friday closed at US $ 3220 per share in New York City, valuing the company at around US $ 2.97 billion Shares of the company have climbed nearly 47% since the day before the planned buyout of Athene and MassMutual was released Oct 1

Brookfield, one of the world’s largest alternative asset managers, will make the investment in two tranches, the second half of which will be completed in early 2021, the companies said The deal will also allow Brookfield to reinsure up to US $ 10 billion of existing and future annuity liabilities, they added.

American Equity has announced that it will simultaneously launch a US $ 500 million share repurchase program from the proceeds of the investment to offset the dilution the transaction would cause on existing holders due to the ‘issuance of common shares to Brookfield

The partnership will be Brookfield’s biggest foray into insurance to dateLast month, Bruce Flatt, CEO of Brookfield, told an Investor Day that he believes the time has come to move on. grow in the industry with zero interest rates Over time, he said, the insurance industry could be a $ 100- $ 200 billion business to his business

« We are delighted to invest in American Equity and partner with the reinsurance business as it strengthens its leadership position as a provider of retirement planning annuities, » said Sachin Shah, Brookfield’s chief investment officer, in a statement « This transaction represents a significant investment for us in the attractive US insurance market and we believe our alternative asset strategies can provide long-term value to the company »

The partnership with Brookfield would be an extension of American Equity’s AEL 2 strategy under Bhalla American Equity also announced last month an agreement with Varde Partners and Agam Capital Management as part of this strategy

American Equity announced earlier this month it is reviewing Athene’s offer, which is backed by Apollo Global Management Inc, and MassMutual As part of the proposed deal, MassMutual would get the insurance units and American Equity employees, then would reinsure most of the business to Athene In addition, Athene would acquire the holding company and assume all of American Equity’s debt

American Equity, which was among the top 20 sellers of fixed annuities in the US in the second quarter, has been a frequent target of speculation in transactions Athene had abandoned talks with the insurer last year, previously said a person familiar with the case

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Brookfield Asset Management, American Equity Investment Life Holding Company, Investment Management, NYSE: AEL