American Equity Shareholders Gain: Analyst Explores Brookfield Reinsurance Acquisition

RBC Capital Markets analyst Scott Heleniak downgraded American Equity Investment Life Holding Co AEL to Sector Perform from Outperform at an increased price target of $55 from $50.

The analyst sees AEL's acquisition by Brookfield Reinsurance Ltd BNRE as fairly priced and justifiable to AEL shareholders.

Yesterday, ARE accepted BNRE's previously disclosed acquisition offer priced at ~$4.3 billion.

As per the terms, AEL shareholders will receive $55.00 per AEL share, consisting of $38.85 in cash and 0.49707 of Brookfield Asset Management Ltd. BAM, having a value equal to $16.15.

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The proposal represents a premium of 35% to the closing price as of June 23, 2023, and a 42% premium to the 90-day volume-weighted average price for the AEL shares.

The analyst doesn't expect a higher bidder to emerge and sees no regulatory hurdles for the deal.

Heleniak raised the 2023 EPS estimate to $6.30 from $5.70 to align with their commentary on investment yields and is unrelated to the merger deal. The analyst estimates the 2024 EPS of $5.75.

Price Action: AEL shares are trading higher by 0.04% at $52.79 on the last check Thursday.