American Equity chooses Brookfield deal on takeover offer

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American Equity Investment Life Holding Co.

on Sunday turned down a takeover offer, saying instead that it has partnered with Brookfield Asset Management Inc.

Brookfield will reinsure up to $ 10 billion of American Equity’s fixed index annuity debt and make a 19.9% ​​equity investment at $ 37 per share. American Equity stocks closed at $ 32.30 on Friday.

The decision comes less than three weeks after the Wall Street Journal reported that two insurance companies – Massachusetts Mutual Life Insurance Co. and the publicly traded Athene Holding GmbH.

ATH -1,20%

– had made an offer for the company, a bet that the small Iowa insurer’s retirement products would remain popular with conservative savers.

The cash offer from MassMutual and Athene for American Equity was $ 36 per share. At that price, the offer would be worth more than $ 3 billion.

Representatives from MassMutual and Athene could not be reached immediately for comment.

Under the agreement American Equity announced on Sunday, Brookfield will also receive a seat on American Equity’s board of directors.

American Equity said it had been in discussions with Brookfield since March as part of the company’s current strategic plans. Among a number of factors behind the decision, the company said the deal will give American Equity access to Brookfield’s higher-yielding alternative wealth strategies, which are particularly important given the low interest rate environment.

“By partnering with a world-class asset management and investment firm like Brookfield, we are accelerating the execution of our strategy to be the leading, customer-centric fixed income provider with world-class capabilities across the insurance value chain to wealth management,” said American Equity President and Chief Executive Anant Bhalla.

Also on Sunday, American Equity announced that its board has approved a program of up to $ 500 million in common stock repurchase to be funded with proceeds from the Brookfield investment and cash on hand. According to American Equity, the buyback is intended to offset the dilution from issuing shares to Brookfield.

“This transaction represents a significant investment for us in the attractive US insurance market and we believe that our alternative asset strategies can deliver long-term value to the company,” said Sachin Shah, Brookfield’s chief investment officer.

Write to Geoffrey Rogow unter [email protected]

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