BAM Brookfield Asset Management Ltd

By Geoffrey Rogow 

American Equity Investment Life Holding Co. on Sunday rejected a takeover offer and instead said it reached a partnership with Brookfield Asset Management Inc.

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. Share of American Equity closed Friday at $32.30.

The decision comes less than three weeks after The Wall Street Journal reported that a pair of insurance companies -- Massachusetts Mutual Life Insurance Co. and the publicly traded Athene Holding Ltd. -- had made a bid for the firm, a bet that the small Iowa insurer's retirement-income products will remain popular with conservative savers.

MassMutual and Athene's cash offer for American Equity had been for $36 a share. At that price, the bid would amount to a value of more than $3 billion.

Representatives for MassMutual and Athene couldn't immediately be reached for comment.

As part of the agreement disclosed by American Equity on Sunday, Brookfield will also receive one seat on American Equity's board.

In its release, American Equity said it had been in discussions with Brookfield since March as part of the firm's current strategic plans. Among a set of factors behind the decision, the company said the deal will give American Equity access to Brookfield's higher-returning 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 implementation of our strategy to be the leading, customer-focused annuity provider with best-in-class capabilities across the entire insurance value chain, from distribution to asset management," said American Equity President and Chief Executive Anant Bhalla.

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

"This transaction represents a meaningful investment for us in the attractive U.S. insurance market and we believe our alternative asset strategies can deliver long-term value to the company," said Sachin Shah, Brookfield's chief investment officer.

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

(END) Dow Jones Newswires

October 18, 2020 16:54 ET (20:54 GMT)

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