Standard Life will acquire Aegon UK for £2bn, with the transaction covering its UK pension and insurance business.
Standard Life said this acquisition will see the company become the UK’s largest retirement savings and income business in the UK, and propel it to second place in the workplace market, adding £74bn assets under administration and 2.1m customers to its existing workplace offering.
The deal will is expected to complete at the end of the year, will also see Standard Life become the second largest provider in the retail savings business.
This acquisition comes at a time when size is becoming increasingly important in the workplace market, with the new scale test due to come into force in the Pension Schemes Bill, which returns to the House of Commons today. Aegon announced at the end of last year, that it was putting its UK business up for sale, with Standard Life (then known by the Phoenix name) named in Corporate Adviser as one of the frontrunners to buy the company.
Standard Life says this deal will enable it to expand its administration and distribution capabilities through increased reach across corporate advisers and adviser-led employer segments, a structurally growing part of the UK DC market.
It adds that the deal will also improve end-to-end workplace outcomes by linking savings, engagement and service more effectively with downstream retail consolidation and decumulation pathways. It adds that the acquisition will also enable it to transform its adviser offering, by securing a proven platform.
Overall it says this acquisition will strengthen its capabilities and customer offering and will deliver a ‘net synergy value’ of £0.8bn. The transaction will be financed through a combination of £750m in cash — supported by £650m in new debt — and the issuance of 181.1m new ordinary shares to Aegon.
The Dutch-based Aegon, is expected to move its HQ to the US and change its name to Transamerica, a brand it already uses in North America.
Andy Briggs, Group CEO of Standard Life, said: “Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business.
“We will be in an even stronger position to meet the evolving needs of our 16 million 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 adds: “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.”
