Aviva has finalised a £5.6billion takeover of Friends Life that will see the disappearance of the life office founded by Quakers in 1832.

Aviva has finalised a £5.6billion takeover of Friends Life that will see the disappearance of the life office founded by Quakers in 1832.

A public company since 2001 but still registered as Friends Provident, the former mutual??s shareholders will receive 0.74 new Aviva shares for each share they own, ending up with 26 per cent of the merged business.

Aviva, which employs 2500 in its general insurance business in Perth and Bishopbriggs near Glasgow, said the synergies would save £225m in annual costs within three years, but it was not specific about headcount issues.

Mark Wilson, the New Zealander who has led the turnround of Aviva following the 2012 departure of Andrew Moss, said: ??It is one of those rare transactions where two organisations can fit together with almost surgical precision."

Mr Wilson told a media conference the leaked news of a merger 11 days ago had surprised observers, adding: ??Cash flows are what our investors signed up to and if an opportunity comes that delivers cashflow...not considering it would be imprudent.?? The deal would add around £600m to annual cashflow and bring down leverage, he added. ??It secures our leadership position in our home market and gives greater flexibility to drive growth in other parts of the Aviva group.??

Asked how the ambitious savings targets would affect jobs, Mr Wilson said there would be ??some duplication of roles and headcount reductions?? but the major opportunities were in asset management and systems. The group plans to ??recapture?? Friends Life??s £70bn of outsourced asset management for the benefit of Aviva Investors, headed by former Standard Life star Euan Munro, making it ??a more meaningful part of the group??, Mr Wilson said. Aviva already manages some £280bn.

Around 60 per cent of the savings are expected to come from Friends Life, whose chief executive Andy Briggs will become chief executive at Aviva UK Life and join the Aviva board. Friends shareholders will have to settle for a lower Aviva dividend, after a 10p bonus on their own dividend this year, but have been promised future growth.

Mr Briggs said: ??Together we will have scale leadership positions across our chosen growth markets, ensuring that the new group is well placed to take advantage of the opportunities presented by the rapidly evolving UK life insurance market.??

The merged group??s market capitalisation will rise to some £21bn, twice that of Standard Life but barely half that of Prudential, which rejected a £17bn merger approach from Aviva in 2006.