Apollo Global to merge Athene Holding in an $11 billion all-stock deal

Under the terms of the transaction, each outstanding Class A common share of Athene will be exchanged at a fixed ratio of 1.149 shares of Apollo common stock. 

Upon closing of the merger, current Apollo shareholders will own approximately 76 per cent of the combined company on a fully diluted basis, and Athene shareholders will own approximately 24 per cent.

Apollo, which holds a 27 per cent stake in Athene, currently provides asset allocation services and directly manages a portion of Athene’s assets across its investment platform, primarily in the credit business.

The merger of Apollo and Athene combines two growth companies providing products and services that are in high demand – investment returns and retirement income, Apollo Global stated, adding that the stronger capital base and complete alignment will allow the company to rapidly scale asset and liability origination, broaden distribution channels and act as a leading global solutions provider. 

“Apollo’s conversion to a simplified structure with a single class of common stock with equal voting rights and empowering the full board with management responsibility of the business are also two significant steps towards these ends,” Apollo founder and chairman Leon Black said.

“This merger is all about alignment between Apollo and Athene, amongst Apollo’s stockholders and with our limited partners. For Apollo and Athene, we will have total alignment to optimize our strategy and allocate capital efficiently, which will include rapidly scaling our capability to originate attractive risk/reward assets, which are the limiter of growth for both firms,” Apollo co-founder and incoming CEO Marc Rowan said.

“We have also created alignment among all our stockholders who will share in the upside of a larger, more liquid company with leading corporate governance. And it further aligns interests with our fund investors, giving us a bigger balance sheet to invest alongside clients in our various fund products,” he added.

The merger creates $29 bn pro forma market cap company, which is expected to be eligible for S&P 500 inclusion, with transparent, best-in-class governance.

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.

The 100 per cent stock-for-stock deal will qualify the deal as a tax-free transaction for US federal income tax purposes, while substantially strengthening earnings power of the combined company to more than double Apollo’s reported earnings in 2020

Full alignment between Apollo and Athene, with all stockholders participating in the upside ensures $1.60 annual dividend following closing with increase based on growth of the business.

Apollo proceeds with conversion to simplified structure, with single class of voting stock and equal voting rights for each share.