Brighthouse rallies as Aquarian nears $4B acquisition deal

Shares of Brighthouse Financial (BHF) surged on Friday following a report that Aquarian Holdings is in advanced discussions to take the U.S. life insurer private.

REPORT: The Financial Times reported that Aquarian Holdings, which is backed by Mubadala Capital, is in advanced talks to buy the life insurer and take Brighthouse Financial private in what could be a $4B transaction. A deal could be announced as soon as this weekend, three people briefed on the matter, who add that Aquarian will pay as much as $70 per share, a 40% premium to Brighthouse’s equity in January. Talks have reached an advanced stage after months of on and off negotiations, but a deal has not yet been fully agreed upon and talks could ultimately break down, the sources say. 

BRIGHTHOUSE AUCTION: Brighthouse, which was spun out of MetLife (MET) in 2017, is working with bankers at Goldman Sachs and Wells Fargo to both consider offers for the whole company or separately to raise minority equity, The Financial Times said in January. Brighthouse’s focus on variable annuities, a complex product that is expensive to hedge and carries high capital charges, has discouraged some bidders, sources said at the time. Since then, the Brighthouse auction featured interest from several private capital groups, including Apollo (APO), TPG (TPG), Sixth Street (TSLX), and Carlyle (CG), the FT said. 

The Brighthouse sale process comes as several other large life insurance platforms, including American Equity Life, American National, Global Atlantic, and Talcott Resolution, have merged into alternative asset managers.

PRICE ACTION: In afternoon trading, shares of Brighthouse Financial are up 27% to $58.