As per the agreement, Brookfield will offer $38.85 in cash and 0.49707 of Brookfield Asset Management (BAM) Class A limited voting share for each AEL share held.
Brookfield currently owns a 20% stake in the life insurance company.
The $55 offer reflects a 35% premium over the undisturbed closing share price of AEL on 23 June 2023, and a 42% premium over the 90-day volume-weighted average share price of AEL as of that date.
Brookfield Reinsurance CEO Sachin Shah said: “This transaction represents an important step in the continued growth of our insurance business, further diversifying, and scaling, our insurance capabilities, and is a direct result of the partnership we have developed with AEL since our initial investment in 2020.”
AEL president and CEO Anant Bhalla said: “We are pleased to have reached this agreement with Brookfield Reinsurance and believe this transaction provides an excellent outcome for all AEL shareholders, policyholders and other stakeholders.
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“The transaction represents an opportunity for AEL shareholders, through the BAM Shares, to remain invested in a market-leading global alternative asset manager.”
Along with continuing AEL’s commitment to alternative asset strategies, Brookfield Reinsurance anticipates that BAM will handle a sizable percentage of AEL’s assets.
Upon completion, AEL shares will be delisted from the New York Stock Exchange, while shares of AEL’s Series A noncumulative preferred stock and Series B preferred stock will continue to trade.
As per the agreement, AEL has agreed to stop paying dividends on its common shares through the completion of the merger.
Subject to AEL shareholder approval and other closing requirements such as regulatory approvals, the transaction is anticipated to close in the first half of 2024.
In February, Brookfield Reinsurance signed a $1.1bn deal to acquire underwriting company Argo.