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American Equity completes takeover bid with Brookfield

American Equity Investment Life Holding Co.

AEL 0.34%

Sunday rejected a takeover bid and instead said it has partnered with Brookfield Asset Management Inc.

BAM -0.06%

Brookfield will reinsure up to $ 10 billion of American Equity’s fixed index annuity liabilities and make a 19.9% ​​equity investment at $ 37 a share. The share of US equities closed Friday at $ 32.30.

The move comes less than three weeks after the Wall Street Journal reported that a pair of insurance companies – the listed Massachusetts Mutual Life Insurance Co. and Athene Holding Ltd.

ATH -1.20%

[…]had made an offer for the company, a bet that Iowa’s small insurer’s retirement income products will remain popular with conservative savers.

MassMutual and Athene’s cash offer for American Equity was $ 36 per share. At that price, the offer would be worth more than $ 3 billion.

Representatives for MassMutual and Athene could not be reached immediately for comment.

As part of the deal unveiled by American Equity on Sunday, Brookfield will also receive a seat on the American Equity board.

In its statement, American Equity said it had been in talks with Brookfield since March as part of the company’s current strategic plans. Among a set of factors driving the move, the company said the deal would give U.S. stocks access to Brookfield’s higher-yielding alternative asset strategies, which are particularly important given the low interest rate environment.

“By partnering with a world-class asset management and investment firm like Brookfield, we are accelerating the execution of our strategy to become the leading client-focused annuity provider with best-in-class capabilities. across the entire insurance value chain, from distribution. to asset management, ”said American Equity President and CEO Anant Bhalla.

Also on Sunday, American Equity said its board of directors had authorized a repurchase program of up to $ 500 million of common stock to be funded with the proceeds of Brookfield’s investment and available cash. The buyback is expected to offset the dilution of the share issuance to Brookfield, according to American Equity.

“This transaction represents a significant investment for us in the attractive US insurance market and we believe our alternative asset strategies can deliver long-term value to the company,” said Sachin Shah, Chief Financial Officer Brookfield investments.

Write to Geoffrey Rogow at geoffrey.rogow@wsj.com

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