Athene Holding Ltd. closed 6% higher on Monday after the company announced an all-stock merger agreement with Apollo Global Management. The transaction implies an equity value of approximately $11 billion for the retirement services company.
Per the deal, Athene (ATH) shareholders will receive 1.149 shares of Apollo common stock in exchange for each share held. The combined company will have a market cap of $29 billion and could become eligible to list on the S&P 500.
Upon completion of the transaction, Athene shareholders will own approximately 24% of the combined company, while Apollo (APO) shareholders will have around a 76% stake. The deal is anticipated to close in Jan. 2022.
Furthermore, the merger is expected to be significantly accretive to earnings. The combined company’s earnings are projected to more than double from Apollo’s 2020 reported earnings. (See Athene stock analysis on TipRanks)
Additionally, the two companies intend to make the merger a tax-free transaction for their respective shareholders and will distribute a dividend of $1.60 per share upon closure of the deal.
Following the announcement, Wells Fargo analyst Elyse Greenspan said that “we believe the combination of the two makes sense. Further, the all-stock payment will enable ATH shareholders to participate in the potential upside in APO stock post close. The companies believe that the transaction will help APO be eligible for additional indexes, including the S&P 500, which had been a goal of ATH’s as well.”
The Street has a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 4 Buys and 5 Holds. The average analyst price target of $52.13 implies shares are fully priced at current levels. Shares have gained about 37.7% over the past year.
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