The British insurance company Aviva has agreed to acquire the pensions company Friends Life for £5.6 billon. If the deal goes through the combined insurance powerhouse will be the UK’s largest insurance, asset management, and savings firm.
Sir Malcolm Williamson, chairman of Friends Life, said:
“The board is pleased to recommend the offer which strongly supports our focus on generating value for shareholders.”
If the acquisition is given the green light by Friends Life shareholders then they will own 26% of the combined company and receive 394p for every share they own. This is a a 15% premium to Friends Life’s closing price on the London Stock Exchange on 20 November.
John McFarlane, chairman of Aviva, said:
“Aviva’s recent success and sound growth and return prospects already present a compelling investment proposition and enable us to advance our strategy through acquisition as well as organic growth.”
“The proposed acquisition not only consolidates Aviva’s leading position which Aviva has established in the UK, it is expected to enable a much stronger dividend flow and balance sheet position than would otherwise have been possible. It also offers Friends Life shareholders an attractive outcome.”
Andy Briggs, chief executive of Friends Life, will become the chief executive of Aviva UK and join Aviva’s board as an executive director.
Mr Briggs said:
“Friends Life has always been about maximising value for shareholders and delivering strongly for customers. The compelling combination of Friends Life and Aviva provides an excellent opportunity to accelerate our existing strategy and growth, generating value for shareholders faster.”