American Equity rejects unsolicited acquisition proposal from Athene and MassMutual
American Equity announced that it has entered into a strategic partnership with Brookfield Asset Management for the reinsurance of $5 billion of existing liabilities and up to an incremental $5 billion of new sales of American Equity’s IncomeShield or similar fixed index annuity products.
American Equity will receive access to Brookfield investments in targeted asset classes as part of the strategic partnership.
As part of this strategic partnership, Brookfield will acquire a 19.9% ownership interest in the common shares of American Equity. The equity investment will take place in two stages: an initial purchase of a 9.9% equity interest at $37.00 per share promptly following Hart-Scott-Rodino approval, and a second purchase of an incremental 10.0% equity interest, at the greater value of $37.00 per share or adjusted book value per share (excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives).
Brookfield will also receive one seat on American Equity’s Board of Directors following the initial equity investment.
“This compelling strategic transaction, which we have been discussing with Brookfield since March, demonstrates the substantial shareholder value we are creating through execution of our AEL 2.0 strategy. By partnering with a world-class asset management and investment firm like Brookfield, we are accelerating the implementation of our strategy to be the leading, customer-focused annuity provider with best-in-class capabilities across the entire insurance value chain, from distribution to asset management. This partnership accelerates the transformation of our business toward a ROA model from our historical focus on ROE, unlocks new investment opportunities, and enables us to deliver significant value to our shareholders and policyholders.” – Anant Bhalla, President and Chief Executive Officer of American Equity.
Authorization of $500 Million Share Repurchase Program
American Equity’s Board has authorized the repurchase of up to $500 million of common shares to be funded with the proceeds of the Brookfield equity investment and cash on hand. The repurchase is expected to offset dilution from the issuance of common shares to Brookfield. American Equity expects to commence the share repurchase after its third quarter earnings announcement.
Rejection of Unsolicited, Non-Binding Proposal from Athene and MassMutual
After careful review with the assistance of its financial and legal advisors, American Equity’s Board unanimously determined that Athene and MassMutual’s unsolicited, non-binding proposal made public by Athene on October 1, 2020 is opportunistic, significantly undervalues the Company, and is not in the best interests of American Equity and its shareholders and other stakeholders.
“The Board is excited about the value-creation prospects of the Company’s AEL 2.0 strategic plan, which is already delivering results as demonstrated by today’s announcement. We strongly believe this is the right course of action for maximizing long-term value for our shareholders and other stakeholders.” – John M. Matovina, Chairman of American Equity’s Board.
