Resolution to merge AXA UK firms with Friends
By Robert Barr |
June 25, 2010, Friday
|
Print Edition
Print Edition
BRITISH buyout fund Resolution Ltd said yesterday it has agreed to buy a package of British businesses from French insurer AXA SA in a deal worth 2.75 billion pounds (US$4.1 billion).
Resolution says it intends to merge the AXA businesses with another British insurer, Friends Provident, doubling Resolution's share of the British life and pensions market.
It aims to save 75 million pounds a year in costs within three years by combining the operations.
Resolution is paying 2.25 billion pounds in cash and up to 500 million pounds in deferred compensation. The purchase is financed by a rights issue of 2.05 billion pounds and an acquisition facility of 400 million pounds.
"We believe this is a sensible deal that will further enhance the management's historic track record of buying undervalued assets, restructuring them and selling them on to create value for shareholders," said Jonathan Jackson, head of equities at Killik & Co in London.
Jackson said the acquisition represents the second step in Resolution's UK Life Project, which targets growing its life and asset management business to 10 billion pounds on an embedded value basis by the middle of next year.
Embedded value, used for evaluating insurance companies, reflects expected future cash flows from sales in the year.
The Unite union, representing AXA staff in Britain affected by the deal, said it was worried employees might lose their current pensions.
The deal is subject to approval by Britain's Financial Services Authority and Resolution's shareholders.
Resolution says it intends to merge the AXA businesses with another British insurer, Friends Provident, doubling Resolution's share of the British life and pensions market.
It aims to save 75 million pounds a year in costs within three years by combining the operations.
Resolution is paying 2.25 billion pounds in cash and up to 500 million pounds in deferred compensation. The purchase is financed by a rights issue of 2.05 billion pounds and an acquisition facility of 400 million pounds.
"We believe this is a sensible deal that will further enhance the management's historic track record of buying undervalued assets, restructuring them and selling them on to create value for shareholders," said Jonathan Jackson, head of equities at Killik & Co in London.
Jackson said the acquisition represents the second step in Resolution's UK Life Project, which targets growing its life and asset management business to 10 billion pounds on an embedded value basis by the middle of next year.
Embedded value, used for evaluating insurance companies, reflects expected future cash flows from sales in the year.
The Unite union, representing AXA staff in Britain affected by the deal, said it was worried employees might lose their current pensions.
The deal is subject to approval by Britain's Financial Services Authority and Resolution's shareholders.
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