- Apollo Global Management said on Monday it will merge with Athene Holding in an $11 billion all-stock deal.
- Apollo has been getting paid lucrative fees by Athene, in which it currently holds a 27% stake.
- The deal is expected to close in January 2022.
Apollo Global Management said on Monday it will merge with Athene Holding in an $11 billion all-stock deal, bringing in-house an annuities provider that helped turned it into one of the world's largest corporate credit investors.
Apollo has been getting paid lucrative fees by Athene, in which it currently holds a 27% stake, for more than a decade, providing asset allocation services and directly managing a portion of Athene's assets across its investment platform, primarily in its ever-expanding credit business.
Yet Athene's shares underperformed the insurance sector following its stock market debut in 2016, prompting a bid from Apollo for its assets.
Apollo said it estimated the tax-free combination could result in its earnings in 2021 more than doubling year-on-year.
"We will have total alignment to optimize our strategy and allocate capital efficiently," said Marc Rowan, Apollo's incoming chief executive, who helped set up Athene in 2009.
Rowan, who co-founded Apollo 31 years ago, has been tasked with running the New York-based firm after board Chairman Leon Black said in January he would step down as chief executive by July, following an independent review of his ties to the late financier and convicted sex offender Jeffrey Epstein.
Under the terms of the deal, each outstanding class A common share of Athene will be exchanged for 1.149 shares of Apollo common stock, representing a premium of about 16.5% to Athene's closing share price on Friday.
The company's shares were up nearly 19% in premarket trade, while Apollo was up 4.7%.
Existing Apollo shareholders will own about 76% of the combined company, and Athene investors will own the rest. The deal is expected to be completed in January 2022.
Apollo also said that the conflicts committee of its board has approved changes that would result in a simpler, more transparent corporate structure that is expected to be put in place by January 2022.
The private equity firm said last month it would look into changing its corporate governance structure, getting rid of shares with special voting rights that currently give Black and other co-founders effective control of the firm.
Founded in 2009, Athene also serves as Apollo's partner insurance company and had total assets worth $202.8 billion at the end of 2020, with operations in the United States, Bermuda, and Canada.