Apollo acquiring Athene in $11B all-stock deal

Apollo Global Management Inc. and Athene Holding Ltd. have agreed to merge in an all-stock transaction that implies a total equity value of roughly $11 billion for Athene.

Each outstanding Athene class A common share will be exchanged for a fixed ratio of 1.149 common shares of Apollo.

Upon closing of the merger, current Apollo shareholders will own about 76% of the combined company, while Athene shareholders will own roughly 24%. The deal would create a $29 billion pro forma market cap company, based on the March 5 close, that is expected to be eligible for S&P 500 inclusion.

The companies said the transaction is "substantially accretive." The combined company is expected to more than double Apollo's reported earnings in 2020, with a $1.60 annual dividend forecast following closing. The companies expect to hire more people as the business grows.

A special committee of certain disinterested members of the Athene board and the conflicts committee of the Apollo board unanimously approved the merger and determined it to be fair from a financial point of view and in the best interests of their respective shareholders. The companies' boards also approved the merger.

The companies intend for the transaction to qualify as a tax-free transaction for U.S. federal income tax purposes. Apollo, together with certain of its related parties and employees, currently owns approximately 35% of the outstanding Athene class A common shares.

Apollo also announced that the conflicts committee of its board has approved changes that aim to simplify its corporate structure, with a single class of common stock and a one share for one vote policy. The conversion is expected to be completed in January 2022.

Incoming Apollo CEO Marc Rowan will lead the combined company, while co-Presidents Scott Kleinman and James Zelter will continue to lead Apollo's business. Athene will continue to be led by CEO Jim Belardi.

Four directors of Athene are expected to join the combined company board including Belardi. Chairman Leon Black, co-founder Josh Harris and lead independent director Jay Clayton will continue in their respective roles at Apollo.

The transaction, which is expected to close in January 2022, requires the approval of shareholders of both Apollo and Athene, and is subject to the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, other antitrust and regulatory approvals, and other customary closing conditions.

Apollo is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel in connection with the proposed transaction. The conflicts committee of the Apollo board is represented by Simpson Thacher & Bartlett LLP. Barclays served as financial adviser to the conflicts committee of the Apollo board in connection with the merger. Perella Weinberg Partners LP served as financial adviser to the conflicts committee of the Apollo board in connection with its corporate governance updates.

Athene is represented by Sidley Austin LLP as legal counsel, while the special committee and disinterested members of Athene's board are represented by Latham & Watkins LLP. Walkers Global represented Athene's special committee on matters of Bermuda law. Lazard Frères & Co. and Houlihan Lokey served as financial advisers to the special committee of Athene's board.