(Bloomberg) -- American Equity Investment Life Holding Co. is expected to strike a new partnership with Brookfield Asset Management Inc. as an alternative to a proposed $3 billion takeover from Athene Holding Ltd. and Massachusetts Mutual Life Insurance Co., according to people familiar with the matter.

As part of the partnership, which may be announced as early as Sunday, Brookfield is expected to take a 19.9% stake in American Equity at roughly $37 a share, or a 15% premium to where its shares closed Friday, the people said, who asked not to be identified because the matter isn’t public. Brookfield is also expected to receive a board seat under the deal, they said.

American Equity is also expected to formally reject the $36-a-share takeover proposal from Athene and MassMutual on the grounds that it undervalues the company and is opportunistic, the people said. American Equity and Brookfield have been in talks about a possible transaction since the early part of the year, before they picked up in March, the people said.

Representatives for American Equity and Brookfield declined to comment. Representatives for Athene and MassMutual weren’t immediately available for comment.

Shares in American Equity closed Friday at $32.20 a share in New York, valuing the company at roughly $2.97 billion. The company’s shares have climbed almost 47% since the day before the proposed takeover from Athene and MassMutual was made public Oct. 1.

Brookfield, one of the world’s largest alternative asset managers, will make the investment in two tranches, the second half of which would be completed in early 2021, the people said. The deal will also see Brookfield reinsure as much as $10 billion in existing and future annuity liabilities, they added.

American Equity is also expected to launch a $500 million share buyback program from the proceeds of the investment to offset the dilution the deal will have on existing holders because of the issuance of common shares to Brookfield, the people said.

Brookfield Strategy

The partnership will be Brookfield’s largest foray yet into insurance. Last month, Bruce Flatt, Brookfield’s chief executive officer, said at an investor day that he believed the time was right expand into the sector with interest rates at zero. Over time, he said, the insurance sector could be a $100 billion to $200 billion business for his firm.

“There’s a lack of capital in insurance today in the general markets across the world, and, therefore, we think in the annuity long-tailed business, it could be very attractive to us,” Flatt said at the September event.

Brookfield currently has roughly $550 billion in assets under management, according to its website.

American Equity Expansion

The partnership with Brookfield would be an expansion of American Equity’s AEL 2.0 strategy under new Chief Executive Officer Anant Bhalla. American Equity also announced an agreement with Varde Partners and Agam Capital Management last month as part of that strategy.

American Equity disclosed on Oct. 1 it was reviewing the offer from Athene, which is backed by Apollo Global Management Inc., and MassMutual. As part of the proposed deal, MassMutual would get American Equity’s insurance units and employees and then reinsure the bulk of the business to Athene. In addition, Athene would acquire the holding company and assume all of American Equity’s debt.

American Equity, which was among the top 20 sellers of fixed annuities in the U.S. during the second quarter, has been a frequent target of deal speculation. Athene had walked away from talks last year with the insurer, a person familiar with the matter previously said.

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