The recently announced merger between Athene Holding Ltd. and alternative asset manager Apollo Global Management Inc. has the potential to form a powerful entity, according to a substantial Athene shareholder who did not wish to be identified.

"We think that this combination is creating the early days of Berkshire Hathaway Inc. or SunAmerica," the shareholder said, emphasizing a very positive view of the transaction.

Both Berkshire and SunAmerica were known, and highly valued by investors, for combining insurance liabilities with unique approaches to managing assets.

Athene and Apollo are set to merge in an all-stock transaction that carries 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. The transaction will make Athene a privately held company.

Athene saw its shares shoot up March 8, the day the deal was announced, but the stock price has been declining since then. The price of Apollo shares has also decreased throughout the week.

At close of markets on March 12, Athene shares finished up 2.58% for the week, while Apollo shares fell 2.99% for the week.

Given Apollo's asset management and Athene's industry growth, the shares were "meaningfully mispriced," the shareholder said, adding that Athene management has done a "good job."

During a deal call, Rowan noted that the transaction does not represent an "investment in the insurance business," in contrast to those made by other private equity houses. Instead, the incoming chief executive said the deal reflects the "natural outgrowth" of two close partners that are now set to be "fully aligned."

The two companies do indeed have a longstanding close relationship, with Apollo having had its business intertwined with Athene's for many years.

In December 2016, Athene went public at an IPO price of $40 a share. As of Dec. 31, 2020, Apollo held roughly 55 million Athene common shares, or 28.5% of all common shares outstanding, making the asset manager Athene's largest shareholder.

Following the merger announcement, analysts expect Athene to continue doing deals.

In an interview with S&P Global Market Intelligence, Piper Sandler analyst John Barnidge said Athene management probably sees a "good opportunity for consolidation in the annuities space."

In a note, Barnidge said he had recently sensed Athene was "preparing to meaningfully participate" in industry consolidation in 2021, and does not think the transaction would change that.

"We do not see why this transaction would preclude from [Athene] being a meaningful participant in industry consolidation still in 2021 ahead of transaction close," Barnidge said.

S&P Global Ratings analyst Carmi Margalit said in an interview that he did not think that being owned by a particular entity whether private or not makes a huge difference for operations.

"We don't necessarily think that ownership drives financial strength," Margalit said. However, he noted that privately owned companies do tend to run their capital a "little bit thinner."

Multiple analysts noted that the deal will help the combined entity become eligible for inclusion in the S&P 500 index, which has been a goal for the two companies.