American Equity accepts Brookfield’s US$4.3 billion takeover

AMERICAN Equity Investment Life Holding accepted a US$4.3 billion cash and stock takeover bid from an arm of Canadian investment giant Brookfield. 

Brookfield Reinsurance agreed to buy all the shares in the US insurer it does not already own for US$55 apiece, according to a statement on Wednesday (Jul 5). The offer represents a 35 per cent premium to American Equity’s closing price on June 23, the last full trading day before Bloomberg revealed Brookfield’s interest. 

The deal to snap up one of the last remaining independent annuities providers in the US boosts Brookfield Reinsurance’s assets under management to around US$100 billion. In recent years, private equity heavyweights ranging from Blackstone to KKR and Apollo Global Management have invested in such companies as a way of gathering more capital they can plough into alternative assets. 

Shares of American Equity have gained 13 per cent in New York this year, giving the company a market value of about US$4 billion.

Brookfield has emerged as the world’s most acquisitive investment firm this year as the biggest private equity funds slow down amid a dearth of financing. The Canadian group agreed in June to buy Middle Eastern payment processor Network International Holdings for £2.2 billion (S$3.78 billion), and it’s leading a consortium that struck an A$18.7 billion (S$16.8 billion) deal for Australia’s Origin Energy.

A transaction would cap several years of takeover interest in American Equity from various suitors and add to the US$16 billion of acquisitions of insurance companies announced globally over the past 12 months, data compiled by Bloomberg show. Brookfield Reinsurance is already the biggest shareholder in West Des Moines, Iowa-based American Equity with a roughly 20 per cent stake, according to regulatory filings. 

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“Under its current leadership, AEL has been transformed into an innovative, asset light insurer,” Brookfield Reinsurance Managing Partner Jon Bayer said in the statement. “Given the complementary nature of AEL’s leading fixed annuity business to our existing platform, we expect to accelerate growth in collaboration with our distribution partners.”

Brookfield Reinsurance’s bid includes US$38.85 per share in cash plus US$16.15 per share in class A stock of Brookfield Asset Management. It plans to continue American Equity’s push into alternative assets and would have Brookfield Asset Management oversee a large part of the company’s portfolio. BLOOMBERG