American Equity Investment Life Holding (AEL) shares leaped on Thursday after the insurer said it had received a takeover bid valued at $3 billion from Athene Holding (ATH) and Massachusetts Mutual Life Insurance.
American Equity said the bid was $36 for each of its common shares outstanding. Shares of the West Des Moines, Iowa, company at last check were up 36% to $29.97. Bermuda-based Athene Holding was up about 4% to $35.41.
In a statement American Equity said its board was reviewing the proposal.
Under the proposed deal, MassMutual would acquire American Equity’s insurance subsidiaries and all its employees, brands and distribution arrangements.
MassMutual would reinsure 80% of American Equity’s existing business to Athene and retain the remaining 20%, according to the Wall Street Journal.
Athene was founded in 2009 and specializes in annuities. The company, which is owned about 35% by the New York private-equity firm Apollo Global Management, has about $162 billion in assets.
The transaction would be the latest consolidation effort in the insurance industry. In July, KKR & Co. (KKR) agreed to buy the retirement and life-insurance company Global Atlantic Financial Group for more than $4.4 billion.
On Wednesday, American Equity said Graham Day would become president of its Eagle Life Insurance subsidiary. The company has about 600 employees.
Athene Holding has about 1,325 employees. MassMutual, based in Springfield, has about 8,000 employees.
Earlier this month, Empower Retirement of Greenwood, Colo., said it definitively agreed to buy MassMutual’s retirement business, a deal valued at $3.35 billion.