American Equity Chooses Brookfield Deal Over Takeover Offer; To Buy Back $500 Mln Shares

American Equity Investment Life Holding Co. (AEL) announced Monday that it has entered into a strategic Partnership With Brookfield Asset Management Inc., under which Brookfield will acquire a 19.9% ownership interest in American Equity.

The company has rejected the unsolicited, non-binding acquisition proposal from Athene and MassMutual made public by Athene on October 1, noting that it is opportunistic and significantly undervalues the company.

Regarding its deal Brookfield, the company said it is partnering for the reinsurance of $5 billion of existing liabilities and up to an incremental $5 billion of new sales of American Equity’s IncomeShield or similar fixed index annuity products.

American Equity will receive access to Brookfield investments in targeted asset classes as part of the strategic partnership.

As part of the stake acquisition, Brookfield will make an initial purchase of a 9.9% equity interest at $37.00 per share promptly following Hart-Scott-Rodino approval, and a second purchase of an incremental 10.0% equity interest, at the greater value of $37.00 per share or adjusted book value per share.

Further, American Equity’s Board has authorized the repurchase of up to $500 million of common shares to be funded with the proceeds of the Brookfield equity investment and cash on hand.

The repurchase is expected to offset dilution from the issuance of common shares to Brookfield. American Equity expects to commence the share repurchase after its third quarter earnings announcement.

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