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American capital to choose Brookfield over Athens, MassMutual Deal

Bruce Flatt, CEO of Brookfield Assest Management.

Photographer: Patrick T. Fallon / Bloomberg

American Equity Investment Life Holding Co. confirmed that it plans to start a new partnership with Brookfield Asset Management Inc., after rejecting a proposed takeover of $ 3 billion from Athens Holding Ltd. and Mutual life insurance in Massachusetts

American Equity said in a statement that under the partnership, Brookfield would acquire a 19.9% ​​stake in the insurer for approximately $ 37 or a 15% premium for the place where its shares closed on Friday. Brookfield will also take a seat on the board of American Equity as part of the agreement, the companies said in separate statements, confirming an earlier report by Bloomberg News.

“This compelling strategic deal that we have been discussing with Brookfield since March demonstrates the significant shareholder value we create through the implementation of our AEL 2.0 strategy,” said Anant Bala, CEO of American Equity, in statement.

American Equity also formally rejected an offer to take over $ 36 a share from Athene and MassMutual on the grounds that it underestimated the company and was opportunistic. American Equity said it believed its current strategy would increase long-term shareholder value.

Representatives Athene and MassMutual were not immediately available for comment.

Shares of American Equity ended Friday at $ 32.20 per share in New York, with the company valued at about $ 2.97 billion. Shares of the company have risen by almost 47% since the day before the proposed takeover by Athene and MassMutual was announced publicly on October 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 reinsure Brookfield to $ 10 billion in existing and future annuity obligations, they added.

At the same time, American Equity said it would launch a $ 500 million share repurchase program to offset the dilution that the deal would have on existing holders due to the issuance of Brookfield common stock.

Brookfield strategy

The partnership will be Brookfield’s biggest foray into insurance to date. Last month, Bruce Flatt, CEO of Brookfield, said on Investors Day that he believed it was time to expand into the sector with interest rates at zero. Over time, he said, the insurance sector could be a $ 100 billion to $ 200 billion business for his company.

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