What happened
Shares of American Equity Investment Life Holding (AEL) were on the rise Tuesday, as the stock price was up about 17.2% as of the closing bell. Shares had been up as much as 19% during the trading day. The stock price is currently up around 16% year to date, trading at roughly $53 per share.
The major markets were all up on Tuesday, as the S&P 500 had gained 50 points (1.2%), the Dow Jones Industrial Average climbed 238 points (0.7%), and the Nasdaq Composite jumped 228 points (1.7%) as of the closing bell.
So what
American Equity Investment Life, also known as American Equity Life (AEL), a leading provider of life insurance and fixed index annuities, was up big today on the news that it was the target for an acquisition. Specifically, it confirmed Tuesday that Brookfield Reinsurance made an offer to buy it.
Brookfield Reinsurance proposed to acquire all outstanding shares of the company that it does not already own for $55 per share. The offer is for $38.85 per share in cash and $16.15 per share in Brookfield Asset Management stock.
The American Equity Life board issued a statement saying it would "carefully review" the proposal and that there is "no guarantee that an agreement will be reached or on what terms."
Brookfield Reinsurance is the largest shareholder of the company, with about a 20% ownership stake in AEL.
Last fall, American Equity Life's stock price plummeted when Sachin Shah, CEO of Brookfield Reinsurance, resigned from the board over a perceived change in the company's strategic direction, specifically its AEL 2.0 strategy. The dispute was believed to be over AEL's purchase of an equity stake in private equity firm 26North Partners, which has a reinsurance arm.
But now it appears Brookfield Reinsurance is back on board, as Shah wrote to board chair Dave Mulcahy that "BNRe is proposing to acquire AEL due to AEL's successful transformation into an asset manager and an asset-light insurer under the AEL 2.0 strategy," according to an SEC filing.
Now what
Things could move really fast here, as Shah said in the letter that he is hoping the "parties may announce a transaction on or prior to June 30, 2023," which is Friday.
Shah also cited the "complementary nature of AEL's annuity business to BNRe's existing re/insurance platform," adding that Brookfield is "committed to continuing AEL's leading position in the annuity market and strong operating platform."
On its face, the offer appears to be better than a $45-per-share offer that AEL rejected last December from Prosperity Group Holdings and its principal shareholder, Elliott Investment Management. It also beats a $36-per-share offer from Mass Mutual in 2020.
Stay tuned for more news, potentially this week.