American Equity Accepts Brookfield’s Takeover Bid
American Equity Investment Life Holding Co. has accepted a $4.3 billion takeover bid from Brookfield Asset Management Inc., ending a months-long battle for control of the insurer.
Brookfield’s Offer
Brookfield, a Toronto-based asset manager, offered $36 a share for American Equity in April, a 25% premium to the insurer’s closing price the day before the bid was announced. The offer was a combination of cash and Brookfield stock.
American Equity’s board had initially rejected the offer, saying it undervalued the company. But the board changed its tune after Brookfield sweetened the deal in June, raising the cash portion of the offer to $31.50 a share.
Shareholder Approval
American Equity shareholders voted overwhelmingly in favor of the deal on Wednesday. The company said in a statement that more than 99% of the votes cast were in favor of the transaction.
The deal is expected to close in the third quarter of 2023.
Background
American Equity, based in West Des Moines, Iowa, is one of the largest providers of fixed annuities in the U.S. The company has been struggling in recent years, as low interest rates have weighed on its profits.
Brookfield has been looking to expand its presence in the insurance industry. The company already owns a stake in the U.K. insurer Aviva Plc and has been looking to add to its portfolio.
Benefits of the Deal
The deal will give American Equity access to Brookfield’s deep pockets and global reach. Brookfield has more than $500 billion in assets under management and a presence in 30 countries.
The deal will also give American Equity a much-needed capital injection. The company has been struggling to keep up with its debt payments and has been looking for ways to shore up its balance sheet.
Regulatory Approval
The deal still needs to be approved by regulators in the U.S. and Canada. American Equity said it expects the transaction to close in the third quarter of 2023, subject to regulatory approval.
Impact on Shareholders
American Equity shareholders will receive $31.50 in cash and 0.743 of a Brookfield share for each American Equity share they own. The company said the total value of the deal is $4.3 billion.
Future Outlook
The deal is a major win for Brookfield, which has been looking to expand its presence in the insurance industry. It is also a win for American Equity, which will get a much-needed capital injection and access to Brookfield’s global reach.
The deal is expected to close in the third quarter of 2023, subject to regulatory approval. Once the deal is complete, American Equity will become a wholly-owned subsidiary of Brookfield.