Aviva plc and Friends Life Group Limited may be on the verge of a merger that would create the United Kingdom's largest insurance, savings, and asset management business by number of customers.
In a statement, the companies have confirmed that they have reached agreement “on the key financial terms of a possible all share combination” (the “proposed terms”).
Moreover, the companies said, the Friends Life board has indicated to Aviva that it is willing to recommend the key financial terms to Friends Life shareholders, subject to reaching agreement on the other terms and conditions of any offer and the completion of mutual due diligence. Any transaction would be subject to regulatory approval.
Under the proposed terms, Aviva would acquire the entire ordinary share capital of Friends Life on the basis of an exchange ratio of 0.74 Aviva ordinary shares for each Friends Life ordinary share.
In addition, the transaction would be structured so that Friends Life shareholders would receive (whether by way of dividend or pursuant to the transaction) an amount in cash equal to any Friends Life final dividend payment for the 2014 financial year (but would not be entitled to any additional amount in respect of any final Aviva dividend payment for the 2014 financial year).
Under the proposed terms, Friends Life shareholders would own approximately 26 percent of the enlarged group.
The Aviva board said that it believed that the combination would create the leading insurance and savings business in the U.K., with 16 million customers. The companies said that their combined business would more than double Aviva's corporate pension assets under administration and create new opportunities by serving Friends Life's £2 billion of annual pension vestings.
Aviva indicated that there could be “no certainty” that it would proceed to make an offer for Friends Life, and that a further announcement would be made “in due course.”
Learn more: http://www.aviva.com/.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].