Athene to merge with Apollo, cementing long standing partnership

Apollo and Athene have agreed to merge in an all-stock transaction that implies a total equity value of approximately $11 billion for Athene.

The combined company will be led by incoming Apollo chief executive Marc Rowan.

Athene will continue to be led by Jim Belardi, Athene’s chairman and chief executive, with his current management team and full workforce. There will be no change to Athene’s platform, investment processes or approvals. Athene’s historic emphasis on providing exceptional policyholder service, being a leading provider of retirement savings products, and maintaining strong financial strength and regulatory relationships, will remain.

Apollo’s business will continue to be led by co-presidents Scott Kleinman and James Zelter, with no change planned for the platform, day-to-day portfolio management or investment processes and approvals.

The transaction will see each of Athene’s outstanding class A common shares be exchanged for a fixed ratio of 1.149 shares of Apollo common stock. Upon closing, Apollo current shareholders will own approximately 76 percent of the combined company on a fully diluted basis, with Athene shareholders owning the remaining 24 percent.

The combined board will comprise 18 directors, of which 12 will be independent. Four directors of Athene are expected to join the combined company board, including Belardi. Chairman and founder Leon Black, co-founder Josh Harris and lead independent director Jay Clayton will continue to serve in their respective roles.

The companies said the combined entity will have a stronger capital base and be better positioned to rapidly scale asset and liability origination and broaden distribution channels.

Belardi emphasised the strength and strategic nature of the “longstanding mutually beneficial relationship” between the two groups.

“After carefully reviewing Athene’s options to unlock value for shareholders, Athene and Apollo determined that the potential of a fully aligned business would be significantly greater than a sum-of-the-parts,” said Belardi. “Coming together in this merger is a logical and exciting next step that will simplify our relationship while driving significant strategic and financial benefits in both the immediate and long-term future.”

Harris added: “Unlike mergers with a high degree of execution risk, this union cements the coming together of two firms that have maintained a close partnership for more than a decade.”

“This merger is all about alignment between Apollo and Athene,” continued Rowan. “We will have total alignment to optimise 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.”

Both sets of stockholders will share in the upside of a larger, more liquid company with leading corporate governance, Rowan added. “It further aligns interests with our fund investors, giving us a bigger balance sheet to invest alongside clients in our various fund products.”

Black said: “The Apollo Athene combination is all about alignment, turbo charging growth initiatives and dramatically enhancing shareholder value. 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.”