Brookfield to buy annuities provider American Equity in $4.3bn deal

BENGALURU: Canadian investment firm Brookfield on Wednesday agreed to buy the remaining stake in American Equity Investment Life Holding that it did not already own, valuing the long-sought-after annuities provider at $4.3 billion.

The offer from Brookfield’s reinsurance arm comes months after AEL rejected a nearly $4 billion bid from Elliott Investment Management-backed insurance firm Prosperity Life, saying it “significantly undervalued” the company.

Brookfield already owns 20% stake in AEL, according to Refinitiv data.

The cash-and-stock offer of $55 per share was initially made by Brookfield in late June. It represents a 35% premium to AEL’s last closing price on the New York Stock Exchange before media reports of a possible takeover bid from Brookfield emerged.

The deal consists of $38.85 in cash and the rest in shares of Brookfield Asset Management’s.

AEL shares had touched a record-high of $53.68 when the bid was announced on June 27 and have been trading around the same levels. Shares were up 2.1% at $52.85 on Wednesday.

“Given the complementary nature of AEL’s leading fixed annuity business to our existing platform, we expect to accelerate growth,” said Jon Bayer, managing partner at Brookfield Reinsurance.

AEL, which provides annuities, an insurance contract that customers buy for a steady income after retiring, will go private once the deal closes in the first half of next year.

“AEL is likely to become more competitive on pricing new business within the FIA (fixed index annuity) market, which should improve its overall level of net flows,” said Evercore ISI analysts.

AEL had also fielded takeover interest from Athene Holding and Massachusetts Mutual Life Insurance in 2020.

If the deal is terminated, AEL has agreed to pay Brookfield Reinsurance a termination fee of $102 million.