Brookfield Corp announced on Wednesday that its reinsurance division will buy American Equity Investment Life Holding (AEL) in a cash-and-stock transaction worth about $4.3 billion, or $55 per share, as the Canadian investment firm boosts its insurance business, Reuters reported.
The deal, which was initially proposed by Brookfield in late June, consists of $38.85 per share in cash and the remainder in Brookfield Asset Management (TSX:BAM.A)'s shares, representing a 35% premium to AEL's last close on the New York Stock Exchange.
"Given the complementary nature of AEL's leading fixed annuity business to our existing platform, we expect to accelerate growth," Brookfield Reinsurance managing partner Jon Bayer said in a statement.
AEL provides annuities, which is an insurance contract that customers typically buy for a steady, guaranteed income stream after retiring.
AEL had previously rejected a $4 billion takeover offer from Elliott Investment Management-backed insurance firm Prosperity Life, saying it "significantly undervalued" the company.
The acquisition is expected to close in the first half of next year, at which point AEL will go private.
Shares of American Equity Investment Life Holding gained 3% in pre-market trading on Wednesday while Brookfield’s NYSE-listed shares edged 1.3% lower.
Contact Sean at sean@proactiveinvestors.com