Two leading investors have come out in favour of Aviva’s £5.6bn acquisition of Friends Life ahead of a shareholder vote on the deal which is set to create the largest insurance and savings business in the UK.
Old Mutual head of UK equities Richard Buxton has lent his weight to the merger, telling the Telegraph: “This is a case of two plus two equals a lot more than four.” Old Mutual is Friends Life’s eighth-largest shareholder.
Likewise, Jupiter Asset Management senior fund manager Alastair Gunn says: “I’m very supportive because it gives exposure to a stronger long-term growth story and the combined company would be run an impressive management team.”
The insurers set out the terms of the deal in December. Under the proposals, Friends Life shareholders will receive 0.74 new Aviva shares for each Friends Life share they currently own. Once the deal is completed, Friends Life shareholders will own approximately 26 per cent of the new life company.
Furthermore, the merger is expected to lead to £225m of cost savings by the end of 2017.
The new company would be largest savings and insurance business in the UK, with 16 million customers.