Phoenix acquires Standard Life Aberdeen's insurance arm in £3bn deal

The deal will see Phoenix pay £2,930m for the business, financed through £1,971m in cash alongside a 19.9% shareholding in Phoenix. Two Directors appointed by Standard Life Aberdeen will also join the Phoenix board.

The acquisition encompasses all of Standard Life Aberdeen's UK and European life insurance business, with the firm retaining its UK retail platforms and advice business.

Completion of the acquisition is expected during the third quarter of 2018.

Earlier this month, Scottish Widows and Lloyds Banking Group’s Wealth businesses terminated their partnership agreements with Aberdeen Asset Management due to its merger with competitor Standard Life.

In a statement, Standard Life Abderdeen said: “While the long-term savings market in the UK is supported by attractive structural growth trends, the board believes that Standard Life Aberdeen can best capture the benefits of these growth dynamics through Aberdeen Standard Investments and its retail platforms.

"In partnering with Phoenix Group, whose expertise is in administering and servicing long-term savings, Standard Life Aberdeen is able to realise attractive value for the disposed businesses, while continuing to benefit from access to related assets and flows.”

Phoenix Group's CEO, Clive Bannister, commented: "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 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 areement. 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%.

"With a purchase price representing 84% of Solvency II Own Funds and £720 million of value from cost and capital synergies, the acquisition is attractive from a financial perspective and supports an anticipated increase in our dividend."