The UK’s Phoenix Group has unveiled its plans to acquire the majority of Standard Life Assurance Limited and employee benefits arm Vebnet Limited for a total consideration of £3.24 billion, and to enhance their long-standing strategic partnership with current owners Standard Life Aberdeen (SLA).
This transaction sees SLA complete their transformation from insurance to investment company, as the purchase will encompass all of SLA’s UK and European life insurance business.
The £3.24 billion sales figure will consist of a cash consideration of £1.97 billion, a £312 million pre-completion dividend, and the issuance to SLA of a 19.99% shareholding in Phoenix Group following the completion of the acquisition.
Phoenix Group Chief Executive Officer (CEO) Clive Bannister said of the acquisition: “This is a compelling transaction for Phoenix, consistent with the Group’s stated strategy and acquisition criteria. The proposed Acquisition establishes Phoenix as the pre-eminent closed life fund consolidator in Europe with more than 10 million policyholders and supports a significant increase in Phoenix’s cash generation.”
The agreement will also see Phoenix and SLA significantly expand and enhance the scope of the existing strategic partnership. As well as entering into a Client Service and Proposition Agreement, SLA will become Phoenix’s largest shareholder and their preferred long-term asset management partner for the newly acquired Standard Life Assurance.
SLA will benefit from providing investment management services for over £158bn of assets under management. As asset manager of choice, this figure will only increase as Phoenix continues to develop more interests in the life insurance industry.
Commenting on the transaction, Martin Gilbert and Keith Skeoch, Co-CEOs of Standard Life Aberdeen, said: “The enhancement of our strategic partnership with Phoenix Group is evidence of our market-leading insurance asset management capabilities. It is also a great opportunity for wider collaboration as the asset manager of choice for Phoenix Group who see further significant consolidation opportunities. With the foundations of a world-class investment company in place we look forward to capitalising on the opportunities that we see ahead of us whilst continuing to deliver for our shareholders.”
Phoenix CEO Bannister added: “The reinforced Strategic Partnership with Standard Life Aberdeen allows both companies to focus on their key strategic strengths whilst generating future value through the new Client Service and Proposition Agreement. We are delighted that Standard Life Aberdeen recognises the value that Phoenix’s ownership of these businesses can deliver and has chosen to become our largest shareholder with a holding of 19.99%.”
The acquisition will also include a long-term commitment from Phoenix to maintain their operational headquarters in Edinburgh. Following the transaction, 57% of Phoenix’s enlarged headcount will be based in the Scottish city.
Due to its size, Phoenix’s acquisition is categorised as a ‘reverse takeover’ and will thus be subject to Class 1 transaction requirements and the approval of both parties’ shareholders. Respective shareholder votes will be held in May 2018 and completion of the acquisition is expected during the third quarter of 2018.