American Equity rejects takeover bid in favor of Brookfield partnership

  • American Equity Investment Life (NYSE:AEL) agrees to a strategic partnership with Brookfield Asset Management (NYSE:BAM), which will reinsure as much as $10B of American Equity's fixed index annuity liabilities and make a 19.9% equity investment in the company at $37/share.
  • The company rejects Athene (NYSE:ATH) and MassMutual's takeover proposal made public earlier this month, saying it undervalues the company and is not in the best interests of shareholders.
  • American Equity also plans to repurchase up to $500M of common shares to be partially funded with the proceeds of the Brookfield equity investment, which is expected to offset dilution from the issuance of common shares to Brookfield.
  • American Equity says the deal will provide access to Brookfield's higher returning alternative asset strategies, which are particularly important given the current low interest rate environment.
  • In a bullish analysis published recently on Seeking Alpha, Courtney LaCalamito praises Brookfield for its diversified business model, strong balance sheet with ample liquidity, and sustainable dividend that likely will increase in the future.

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