Aviva agrees £5.6bn Friends Life takeover

2nd December 2014

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Aviva has agreed terms for the takeover of rival pensions business Friends Life in a deal worth £5.6 billion that will create the UK’s biggest life company.

The bid was first announced two weeks ago, but now the boards of both companies are ready to recommend the deal to their shareholders.

Aviva is to pay a 15% premium to Friends Life’s closing price on November 20.  Friends Life shareholders will own about 26% of the new group which will have £309 billion of assets under management.

Andy Briggs, the group chief executive of Friends Life, will become the chief executive of Aviva UK

Friends Life was created in 2011 from a merger between Friends Provident, Axa UK Life and Bupa Heal Assurance

Sales of annuities have plunged since the Government announced the introduction of new pension freedoms which will give retirees more choice about how they draw an income from their savings in retirement.

John McFarlane, chairman of Aviva, said: “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.”

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