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day calls for each outstanding
Class A share of Athene to be
exchanged for 1.149 shares of
Apollo, reflecting a roughly
16.5% premium over Athene’s
closing price on Friday.
The all-stock deal will re-
sult in Apollo shareholders
owning about 76% of the com-
bined company, with Athene
investors owning the rest.
The deal would have more
than doubled Apollo’s reported
earnings in 2020, the compa-
nies said. Shareholders will
get a fixed annual dividend of
$1.60 per share.
Apollo is hoping the efforts
will help bolster its share
price, which has flagged amid
investor
concerns
over
whether Mr. Black’s Epstein
ties would keep image-con-
scious pension funds and other
institutions from investing
more money with the firm.
Apollo currently manages more
than $450 billion and set a
goal in 2019 of bringing that to
$600 billion within five years.
Shares of Apollo were down
about 4% Monday, while those
of Athene climbed by about 6%.
Investors have long fretted
about Apollo’s dependence on
having Athene as its largest
asset-management client, rep-
resenting about 40% of assets
under management and gener-
ating about 30% of its fee-re-
lated revenue.
For Athene, the combina-
tion is the latest evolution
since it was founded in 2009
with Apollo’s backing. The in-
surer has grown into one of
the nation’s biggest holders of
fixed annuities, a retirement-
savings product favored by
risk-averse, and in many cases
older, people.
Athene was built under for-
mer American International
Group Inc. executive James
Belardi who, funded by Apollo,
acquired fixed-annuity blocks
of business cheaply in the af-
termath of the financial crisis.
The investment firm was con-
tracted to choose investments
to back up Athene’s obliga-
tions to pay consumers.
Mr. Belardi quickly made
Athene a major driver of con-
solidation across the U.S. life-
insurance industry, acquiring
tens of billions of dollars of as-
sets. As of last year, it had $150
billion in net invested assets.
It went public in 2016 and
had a market capitalization of
just over $10 billion before the
merger plans were announced.
In Athene’s early years,
Apollo owned 17%, but con-
trolled 45% of the vote in an
arrangement that led some
prospective shareholders in
the insurer to balk due to con-
cerns over conflicts of interest.
Apollo in 2019 raised its stake
in Athene to 35% and elimi-
nated the insurance company’s
supervoting shares. Athene
also took a 7% stake in Apollo.
On a conference call to dis-
cuss the deal, Mr. Belardi, now
Athene’s chairman and CEO,
said the insurer had a strong
2020 despite the coronavirus
pandemic. Still, he said, “de-
spite all our success and the
numerous competitive advan-
tages we possess, it is clear and
rather unfortunate” that some
shareholders have been wary of
buying the stock. The merger is
the “logical next step” for
Athene to address those con-
cerns and become stronger and
more creditworthy, he said.
Athene’s focus on fixed an-
nuities—which pay buyers in-
terest over a period of years—
dovetails
with
Apollo’s
expertise in credit investing.
Insurers profit by earning
more on investments backing
the products than what they
ultimately pay out to their
customers. State insurance-de-
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