Phoenix Group Holdings confirms the proposed acquisition of Abbey Life Assurance Company Ltd, Abbey Life Trustee Services Ltd and Abbey Life Trust Securities Ltd from Deutsche Holdings No. 4 Ltd. for total £935m.
Deutsche Holdings No. 4 Ltd is a wholly owned subsidiary of Deutsche Bank.
"This is a pivotal deal for Phoenix, giving us the platform and scale to continue as a leader in the consolidation of the UK life industry," said CEO Clive Bannister in a statement.
"The dynamics of this industry offer a number of value-accretive opportunities, as evidenced by the announcement of our acquisition of AXA Wealth's pensions and protection business earlier this year.
"This attractively-priced deal meets precisely Phoenix's areas of strategic focus and stated acquisition criteria, whilst significantly increasing our cash generation and supporting a further increase in our proposed dividend.
"The business models of AXA and Abbey Life are complementary and will allow the Group to gain from economies of scale. Furthermore, Abbey Life policyholders will benefit from stable ownership, improved service levels and a robust governance framework."
- Acquisition to add £10 billion of assets under management and approximately 735,000 policyholders
- Acquisition expected to generate approximately £0.5 billion of aggregate cashflows between 2016 and 2020 and approximately £1.1 billion in aggregate from 2021 onwards
- Attractive price representing 0.89x multiple of Solvency II Own Funds and 0.77x of MCEV
- Acquisition will support a proposed increase in dividends in respect of 2017 to £197 million, representing a further 5% increase in dividend per share ("DPS") in addition to the 5% increase in DPS as a result of the AXA transaction, and equivalent to a total increase in the DPS of 10% from the 2015 level
- Consideration and estimated expenses to be financed through a fully underwritten rights issue to raise a total of £735 million and a £250 million new bank facility.
At 9:21am: (LON:PHNX) Phoenix Group Holdings share price was +27.5p at 866p