Norwich-based Aviva in advanced talks with Friends Life about a merger deal
- Credit: © ARCHANT NORFOLK PHOTOGRAPHI
Norwich-based Aviva is in advanced talks with Friends Life about a merger deal, it was confirmed last night.
The potential combination would create the UK's leading insurance, savings and asset management business by number of customers.
Friends said it was prepared to recommend the terms of Aviva's offer, which values it at more than £5.5 billion, to its shareholders.
Friends Life was created in 2011 following the amalgamation of Friends Provident, the majority of Axa UK Life and Bupa Health Assurance.
The businesses were rebranded to form Friends Life Group, providing pensions, investments and insurance and retirement income products.
You may also want to watch:
The group can trace its roots back to the 1800s as the Sun Life Assurance Society formed in 1810 and Friends Provident, which was formed in Yorkshire in 1832.
The company has more than five million customers, around 4,000 staff worldwide and manages funds worth in excess of £117 billion.
- 1 Two city businesses on the move as mystery new tenant hovers
- 2 Vision for multi-million pound new Norwich venue revealed
- 3 Norfolk cliffs fall man arrested on suspicion of murder released on bail
- 4 Norfolk-based Rick Wakeman 'stunned and proud' after being made a CBE
- 5 'People didn't know I existed' - Shopkeeper thrilled with new store
- 6 Scams in Norfolk this week: Hermes texts and electricity boxes
- 7 Be lord of the manor: Site of forgotten mansion for sale for £2.3m
- 8 Ask the Expert: How much income will my £350,000 pension generate?
- 9 Woman sexually assaulted in Norwich
- 10 Volunteer hit with £100 parking fee while collecting food for needy
A combination with Aviva creates a business with 16 million UK customers.
Under the terms of the proposed offer, Friends Life shareholders would own about 26pc of the enlarged group.
The board of Friends Life said it is willing to recommend the key financial terms of the proposal to its shareholders, subject to reaching agreement on the other terms and the completion of due diligence.
The move by Aviva comes after a resurgence in its fortunes under chief executive Mark Wilson.
He took charge in January last year after the departure of predecessor Andrew Moss in the wake of a humiliating shareholder revolt over his pay and the faltering pace of the business.
Since then he has cut hundreds of jobs and has disposed of several businesses as part of his turnaround strategy.
The group, which has 31 million customers in 15 countries, recently reported a 4% rise in half-year operating profits to £1.05 billion.
In Aviva's UK life and pensions division, the value of new business was down 21% to £177 million as Budget reforms removed the need for people to buy an annuity in order to draw their pensions.
Aviva said access to Friends Life's strong level of cash generation was a key motivation for the deal as this should help accelerate growth of its dividend.
The company said customers in the combined group would benefit from being part of a stronger and more diversified group with a wider product range.
Aviva predicted a doubling in corporate pension assets under administration.