A statement published on the London Stock Exchange this morning outlines the terms of the £5.6bn (€7bn, $8.7bn) purchase of Friends Life by Aviva.
Following the proposed acquisition, holders of Friends Life shares will receive 0.74 new Aviva shares for each stock they own. This is expected to result in Friends Life shareholders owning approximately 26% of Aviva.
It is also expected to accelerate Aviva’s dividend growth, and allow the company to add up to £70bn of Friends Life’s UK assets under administration, increasing its assets under management by up to 29% to reach £309bn.
Following the acquisition, it is anticipated that Andy Briggs, the current group chief executive of Friends Life, will become chief executive officer of Aviva UK Life and will join the board of Aviva as an executive director.
It is also expected that Malcolm Williamson, the current chairman of Friends Life, will join the board of Aviva senior independent director.
Commenting on the acquisition, Briggs said: “Together [the two companies] will have scale leadership positions across out chosen growth markets, ensuring that the new group is well placed to take advantage of the opportunities presented by the rapidly evolving UK life insurance market.”
John McFarlane, chairman of Aviva, added: “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.”
He said the move is consistent with the company’s investment proposition of “cash flow plus growth”.
In August, there was speculation that Friends Life had hired Goldman Sachs to find a buyer for its international arm, Friends Provident International (FPI).
This came after the company agreed to sell its Luxembourg-based Lombard International Assurance business to global investment group Blackstone for an initial consideration of £317m.
