Resolution to buy Axa's UK life business in £2.75bn deal

24 June 2010 0:00 am | Updated: 24 June 2010 8:13 am | By Leah Milner

Following the acquisition of Axa’s life and pensions business Friends Provident is set to rebrand as Friends Life in 2011.

Axa’s wealth business, Axa Insurance, Axa PPP healthcare and Bluefin are unaffected by the deal.

Friends Provident chief executive Trevor Matthews (pictured) will lead the new team of the combined business as CEO with Friends’ chief finance officer Evelyn Bourke taking on the new role of executive director of strategy, capital and risk.

Axa managing director of distribution services Paul McMahon and Axa’s managing director of protection Graham Harvey will be joining from Axa UK as managing director of corporate and managing director of individual respectively.

Axa Life CEO Paul Evans will become Axa UK deputy CEO, while Mike Kellard has been appointed CEO of the new AXA Wealth business and will be appointed to Axa UK Plc Board both subject to regulatory approval.

Around 2,200 Axa employees will transfer across to Friends Provident. The insurer says it is too early to estimate how many job cuts will occur but it is looking to create £75m of cost savings as part of the integration.

The deal is comprised of a £2.25bn cash payment to Axa and up to £500m in deferred notes.

The deferred payment will be reduced if less than £1bn of Axa’s reattributed inherited estate is available for release in 2011.

If none of the estate is available, the consideration will fall to £2.6bn.

The transaction is being financed by a fully underwritten rights issue of approximately £2.05bn with leading shareholders having already sub-underwritten more than 52 per cent of the rights issue and a £400m acquisition finance facility.

Resolution chief executive John Tiner says: “The enlarged group will be well positioned to create value from enhanced cashflow, significant synergies and selected profitable new business growth. We see a strong pipeline of potential further consolidation steps which will help complete the company’s UK life project, and we will remain highly disciplined on the selection and pricing of possible transactions.”

Matthews says: “Today’s landmark deal combines two major players in the UK life and pensions market, both of which have a rich heritage.

“There is a good operational fit between both organisations. Bringing them together will make us one of the market leaders in our core businesses of protection and corporate pensions in the UK.

“This combined group will have a substantial offering in protection and corporate pensions products, and a real opportunity to deliver cost efficiencies allowing us to compete more effectively.”

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