Standard Life plc has entered into an agreement to acquire insurance and pensions giant Aegon UK plc for £2 billion.
The pensions provider said the transaction will be funded through a combination of debt, cash and the issue of new ordinary shares in Standard Life.
The cash consideration will be £750m, financed through a combination of £650m debt issuance to be issued prior to completion and cash resources; while Aegon will be issued with 181.1m new shares, representing 15.3% of the group’s enlarged share capital.
The deal creates the UK’s largest retirement savings and income business, with 16 million customers and assets under administration of £480bn.
“Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business,” said Andy Briggs, group CEO of Standard Life.
“We will be in an even stronger position to meet the evolving needs of our 16m 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.”
Lard Friese, Aegon CEO, commented: “Standard Life is the right owner for Aegon UK: 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.
“The businesses are complementary and the combination offers an excellent outcome for Aegon UK’s customers and colleagues. Aegon’s shareholding will provide an opportunity to participate in the future success of the enlarged group.”
The transaction is subject to certain regulatory conditions and is expected to complete around the end of 2026.
Standard Life said its existing strategic shareholders, MS&AD Insurance Group Holdings, Inc and Aberdeen Group Plc, are supportive of the strategy and remain committed to their shareholdings.