What happened
The stock market was mostly in the green on Thursday, with investors optimistic about a pending stimulus agreement, but most major averages were up by less than 1% as of noon EDT. However, American Equity Investment Life Holding (AEL) was soaring, with shares up by more than 40%.
So what
The reason for today's jump wasn't related to American Equity's earnings or anything having to do with the business itself. Instead, news came out that the company received a takeover offer in early September from Athene Holding (ATH) and privately held Massachusetts Mutual Life Insurance.
Image source: Getty Images.
Under the terms of the offer, which was in the form of a letter addressed to American Equity's CEO dated Sept. 8, the pair of insurers offered $36 per share in cash for the insurer, a massive premium to the stock's recent valuation which values the company at about $3.3 billion. American Equity's closing price on Sept. 30 was $21.99, so this offer represents about 64% upside.
Now what
It's unclear if the offer will be accepted; American Equity confirmed the authenticity of the offer and said its board is reviewing it. However, it could potentially be a big windfall for investors, as the $36 proposed offer price represents about 17% upside over the now-higher share price, and far more for investors who have held the stock for a while.
