Brookfield Reinsurance has announced that following close of markets on June 26, 2023, the company has submitted a letter to the board of directors of American Equity Investment Life Holding Company (AEL) setting forth a proposal to acquire all of the outstanding shares of common stock of AEL not already owned by Brookfield Reinsurance for aggregate consideration of $55.00 per AEL share.
According to the announcement, as consideration for each AEL share, shareholders will receive $38.85 in cash and a number of Brookfield Asset Management Ltd., class A limited voting shares (BAM Shares) having a value equal to $16.15 based on the unaffected 90-day VWAP as of June 23, 2023, resulting in total consideration of $55.00 per AEL share, subject to adjustment in certain circumstances.
In addition, Brookfield Reinsurance intends to acquire from Brookfield Corporation shares of BAM required to satisfy the non-cash consideration offered to AEL shareholders.
However, subject to this occurring, BAM’s public float will increase by approximately 10%, which is majorly important as BAM continues to widen its shareholder base.
At the same time, Brookfield Corporation’s interest in Brookfield Asset Management will decrease from 75% to approximately 73%. Accordingly there will be no net new issuance of shares of BAM1, BN or BNRE and no dilution to BAM, BN or BNRE shareholders as a result of this transaction.
Brookfield Reinsurance will have the option to pay cash for the share portion of the transaction if the shares of BAM are trading below where they are trading at the current time such that the aggregate consideration per AEL share would be less than $54.00 per share. Therefore, in this circumstance, Brookfield Reinsurance may elect, in its sole discretion, to pay the non-cash consideration in cash instead of utilizing BAM shares in the transaction.
The proposal represents a premium of 35% to the closing price as of June 23, 2023, the last trading day prior to delivery of the letter, and a 42% premium to the 90-day volume weighted average price as of the same date, in each case, for the AEL common shares.
Further, Brookfield Reinsurance will also increase its assets under management to approximately $100 billion upon closing of the transaction, with BAM increasing its overall AUM to approximately $900 billion through its asset management, wealth and insurance subsidiaries.
In a statement it notes that AEL’s Board will carefully review Brookfield Reinsurance’s proposal in accordance with its fiduciary duties and in consultation with its independent financial and legal advisors.
It is important to note that American Equity has said that it will have no further comment on the proposal until the Board has completed its review, and that there is no guarantee that an agreement will be reached or on what terms.
Ardea Partners and J.P. Morgan are serving as financial advisors to AEL and Sullivan & Cromwell LLP is serving as legal advisor.
In late 2020, AEL entered into a strategic partnership with Brookfield Asset Management.
