Standard Life has acquired Aegon UK in a £2 billion deal, which will create the UK’s largest retirement savings and income business, with 16 million customers and £480 billion assets under administration.
The acquisition will be funded through a combination of cash, debt and shares with Aegon becoming a strategic shareholder and asset management partner.
Aegon will be given 181.1 million shares, equating to a shareholding of 15.3% in Standard Life. The firm will also be able to nominate an executive to the Standard Life board.
Aegon said the transaction supports its ambition to become a leading US life insurance and retirement group. Aegon’s asset management activities in the UK will remain part of Aegon’s global asset manager and will be an important asset management partner for the new combined business.
The deal is expected to close around the end of the year, subject to regulatory approvals.
Lard Friese, CEO of Aegon, said: “The transaction represents an important step in our ambition to become a leading US life insurance and retirement group. The terms reflect our commitment to creating value for shareholders, and through our shareholding we will benefit from further value creation in the combined business.
“Standard Life is the right owner for Aegon UK and a good home for our employees: we share the same values and a strong commitment to customers, and together the businesses will create the UK’s largest retirement savings and income provider.”
Standard Life said the acquisition is expected to increase operating cash generation and IFRS adjusted operating profit by around £160 million per year and deliver £0.4 billion of additional excess cash over the five years following completion.
It will also establish Standard Life as the UK’s second largest workplace pensions platform by assets and customers.
Commenting on the transaction, Standard Life CEO Andy Briggs, said: “Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business.
“We will be in an even stronger position to meet the evolving needs of our 16 million customers with enhanced digital, advice and distribution capabilities across Workplace and Retail, strengthening our standing in one of the world’s most attractive markets. Furthermore, the transaction accelerates our shift to capital-light whilst strengthening our cash, capital and earnings position to create increased value for shareholders.
“With financial wellbeing at the heart of everything it does, Aegon UK’s values and culture are aligned with our own. Together, we will not only be stronger, we will be better – helping our customers achieve better outcomes and greater financial security in later life. I look forward to welcoming everyone at Aegon UK to Standard Life in due course and working together to capture the huge potential in front of us.”
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