PEMBROKE, Bermuda & NEW YORK--(BUSINESS WIRE)--Athene Holding Ltd. (NYSE: ATH), a leading retirement services company, and Apollo Global Management, Inc. (NYSE: APO), a leading global alternative investment manager, announced that the companies have signed an agreement that will serve to strengthen the strategic relationship and reinforce the alignment of interests between the two companies. The transaction includes a share exchange between Apollo and Athene, purchase by Apollo of Athene shares, and also eliminates Athene’s current multi-class share structure which the companies expect will significantly improve Athene’s index inclusion eligibility and expand Athene’s investor base.

Jim Belardi, Chairman and Chief Executive Officer of Athene, said, “Today’s announcement reflects the strength and strategic nature of our longstanding relationship with Apollo. 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. This transaction will remove a material impediment to additional index inclusion and strengthen our corporate governance profile by aligning voting rights with the economic interests of all shareholders. We believe the combination of these factors will greatly enhance Athene’s appeal to a much broader group of active and passive investors.”

Leon Black, Chairman and Chief Executive Officer of Apollo, said, “We are tremendously excited to be announcing this strategic transaction, which we believe will meaningfully enhance value for both Apollo and Athene shareholders. Athene and Apollo have developed a special and symbiotic relationship since Athene’s inception a decade ago. By nearly doubling our economic interest in Athene to approximately 35%, we are reinforcing the durability of our relationship, and enhancing the strong alignment between the two companies."

Under the proposed terms and in connection with the transaction,

• Apollo’s operating group entities will acquire approximately 35.5 million common shares of Athene for approximately $1.55 billion, which is expected to increase economic ownership by Apollo and certain of its related parties and employees to approximately 35%. The acquisition by Apollo will consist of:
  • Approximately 7.5 million of Athene shares in exchange for $350 million of cash, valued at a price of $46.20 per share or a 10% premium to the closing market price on October 25, 2019; and,
  • Approximately 28.0 million Athene shares sold at a 2.3% premium in exchange for an approximately 7% equity stake in Apollo’s operating group entities (approximately 29.2 million Apollo operating group units), valued at approximately $1.2 billion based on the closing market price of Apollo’s Class A common shares on October 25, 2019.

• Apollo and its operating group entities will enter into a lock-up on their existing and newly acquired shares of Athene for three years from the initial closing date. Athene will not have a lock-up on its Apollo operating group equity. Both companies view their investments as strategic in nature and intend to be long-term holders.
• The proposed transaction will add approximately $1.6 billion of capital for Athene, including approximately $1 billion of incremental excess capital. In connection with the transaction, Athene’s board of directors has approved an increase in the share repurchase authorization of $600 million of the company’s outstanding common shares. Athene expects to utilize the $350 million of cash proceeds from Apollo toward these repurchases. Since Athene commenced share repurchases in December 2018, it has repurchased 22.4 million shares in aggregate, representing $928 million of capital returned to shareholders.
• Athene’s bye-laws will be amended and restated to eliminate its multi-class share structure with all outstanding shares of Athene’s Class B Common Shares converted into shares of Class A Common Shares, and all outstanding Class M Common Shares converted into a combination of Class A Common Shares and warrants to purchase Class A Common Shares. Eliminating Athene’s multi-class share structure increases alignment of interests between Apollo’s voting and economic interests in Athene, and is expected to remove material impediments for additional index inclusion, which should serve to increase Athene’s appeal to a broader group of active and passive investors.
• Pro forma for the proposed transaction (and assuming full utilization of the increased share repurchase authorization and taking into account the voting proxies described below), Apollo and certain of its related parties and employees are expected to control combined equity interests representing approximately 35% of the voting power and economic interests of Athene, as compared to the 45% voting power and approximately 17% economic interest that Apollo and certain of its related parties and employees hold today.
• For Athene, assuming utilization of the increased repurchase authorization and a total return for its Apollo holding in line with analyst consensus targets for dividend and stock price appreciation, the proposed transaction is expected to be approximately 1.5% accretive to Athene’s operating earnings per share in year one and approximately 1% dilutive to adjusted book value per share at closing.
• For Apollo, the proposed transaction is expected to be approximately neutral on a sum-of-the-parts valuation basis, and approximately 7% dilutive to Apollo’s Fee Related Earnings per share, as Athene currently does not pay a dividend. If Apollo were to also include its pro rata share of Athene’s adjusted operating earnings, the transaction would be meaningfully accretive to its earnings per share.
• There will be no immediate changes to the current Athene directors as a part of this proposed transaction. Apollo will have the right to nominate five directors to Athene’s 15-person board based on expected ownership at closing. The number of directors Apollo may nominate will be proportionate to Apollo’s operating group entities’ beneficial ownership of Athene.
• As part of the proposed transaction, Athene has agreed to grant Apollo, for a period of up to 180 days after the closing, the right to purchase additional Athene common shares if necessary in order for Apollo and certain related parties and employees to beneficially own, in total, at least 35% of the total Athene common shares outstanding, on a fully diluted basis. The price for any shares purchased pursuant to this right will be the market price for the Athene common shares based on the volume weighted average price for the 30 calendar days prior to the exercise of the right.
• In connection with the proposed transaction, certain members of Athene’s management have also agreed to give a voting proxy to an Apollo operating group entity for purposes of voting their Athene shares at any future shareholder meeting following the closing of the proposed transaction, subject to a customary fall-away.
• Apollo’s operating group entities will have the right in the future to acquire directly from Athene a number of shares that would result in Apollo and certain related parties and employees beneficially owning up to an additional 5% in the aggregate of Athene’s outstanding shares of common shares, pro forma for such issuance, at a price based on an agreed upon mechanism.
• Concurrent with the proposed transaction, Apollo announces $3 billion of total capital commitments raised to date for the Apollo/Athene Dedicated Investment Program (“ADIP”), a fund designed to participate directly alongside the growth of Athene and augment the company’s capital flexibility.

The board of directors of Athene established a special committee of disinterested directors to negotiate the transaction on Athene’s behalf. The special committee of disinterested members of Athene’s board of directors, and all of Athene’s disinterested directors have approved the transaction. Houlihan Lokey provided a fairness opinion to Athene’s board of directors. Athene will be seeking shareholder approval for the proposed transaction, and the proposed transaction is expected to be completed promptly after Athene’s shareholder approval is obtained and all required regulatory approvals are received. The completion of the proposed transaction is subject to customary closing conditions and regulatory approvals. In addition, the conflicts committee of Apollo’s board of directors and the executive committee of Apollo’s board of directors have approved the transaction. Lazard Frères & Co. served as financial advisor to the special committee of Athene’s board and Houlihan Lokey provided a fairness opinion. Barclays served as financial advisor to the conflicts committee of Apollo’s board.

Athene is represented by Sidley Austin LLP as legal counsel and the special committee of Athene’s board is represented by Latham & Watkins LLP. Apollo is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and the conflicts committee of Apollo’s board is represented by Simpson Thacher & Bartlett LLP.

About Athene Holding Ltd.

Athene, through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products offered by Athene include:

• Retail fixed, fixed indexed and index-linked annuity products;
• Reinsurance arrangements with third-party annuity providers; and
• Institutional products, such as funding agreements and group annuity contracts related to pension risk transfers.

Athene had total assets of $139.0 billion as of June 30, 2019. Athene's principal subsidiaries include Athene Annuity & Life Assurance Company, a Delaware-domiciled insurance company, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York, a New York-domiciled insurance company and Athene Life Re Ltd., a Bermuda-domiciled reinsurer.

Further information about our companies can be found at athene.com.

About Apollo Global Management

Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, San Diego, Houston, Bethesda, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong, Shanghai and Tokyo. Apollo had assets under management of approximately $312 billion as of June 30, 2019 in private equity, credit and real assets funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. For more information about Apollo, please visit apollo.com.