Publicly traded private-equity firm Apollo Global Management (APO) - Get Apollo Global Management Inc. Class A Report on Monday said it has agreed to double its investment in insurance and retirement services company Athene Holding (ATH) - Get Athene Holding Ltd. Class A Report in a cash-and-stock deal valued at approximately $1.55 billion.
As part of the deal, Apollo said it will buy an additional 18% stake in the company for $350 million in cash and about $1.2 billion in the stock, the companies said in a statement. Apollo has also agreed to drop Athene's multi-class share structure that gave Apollo more say over the company - and prevented Athene from being eligible for inclusion in certain indexes and from retail and institutional investors including the company in their portfolios.
Specifically, Apollo will buy 7.5 million Athene shares for cash at $46.20 a share, representing a 10% premium and 28 million Athene shares for a 7% equity stake in Apollo, representing $42.97 a share or a 2.3% premium. Athene will also convert to a single-class share structure. Athene's board also approved a $600 million increase in its share-repurchase authorization, partly funded by the deal.
"Today's announcement reflects the strength and strategic nature of our longstanding relationship with Apollo," Athene CEO Jim Belardi said in a statement. "After carefully reviewing Athene's options to unlock value for shareholders, Athene and Apollo determined it is prudent to eliminate Athene's multi-class share structure and make other enhancements to the companies' mutually beneficial relationship."
To date, Apollo has closed on $3 billion of capital commitments to date for Athene's strategic capital vehicle (ACRA), the companies said. Athene was formed in 2009 in the wake of the global financial crisis, when Apollo began working with Belardi, a former AIG executive, in building the company by purchasing deeply discounted fixed-annuity assets that Apollo managed.
Shares of Athene were up 6%, or $2.52 a share, at $44.50 in morning trading, while shares of Apollo were down slightly to $41.14.
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