Aviva goes to the top with £5.2bn takeover

INSURERS Aviva and Friends Life hailed the creation of a formidable "British champion" yesterday after agreeing a £5.2billion takeover.

Rugby match sponsored by AvivaGETTY

Rugby sponsor Aviva will be headed by Mark Wilson and Andy Briggs

The all–share deal, subject to shareholder backing next spring, will make Aviva the UK's leading insurance, pensions, savings and asset management business with 16 million customers.

It is the sector's biggest deal since CGU and Norwich Union merged in 2000 to create Aviva.

Mark Wilson will remain Aviva's chief executive with Friends Life chief Andy Briggs taking over as the head of Aviva UK Life.

Friends Life shareholders will own 26 per cent of the enlarged group.

Aviva's shares rose ½p to 500p with Friends up 9p to 375p.

"I couldn't care less about being number one but every successful firm has a pre–eminent position at home," said Wilson.

"We will be a British champion with a formidable base to grow in the strong domestic insurance market and existing international territories such as China."

Briggs said: "We will take the best of each other's products and people.

"We will have much better insight on what products are most important to people coming up to retirement."

We will take the best of each other's products and people

Andy Briggs

There will also be opportunities for Aviva to cross–sell its household and car insurance products to Friends Life customers.

The deal will generate £600million of excess cash a year and annual savings of £225million by the end of 2017.

Jobs may be cut but Wilson said numbers would not be known until next year.

Aviva employs 12,000 people in the UK and Friends 3,500.

Wilson acknowledged the tie–up was a "surprise" given that investors had expected Aviva, which sponsors Premiership Rugby, to focus on powering its existing business forward after a long period of restructuring.

Shore Capital analyst Eamonn Flanagan said: "We view it as a rights issue in disguise."

Defending the deal, Wilson added: "I see this as a catalyst for the next phase of our transformation.

"Think of it like this. If you are growing a garden and you go to a well each day with a bucket to get water the garden can still be bountiful and green.

"However if you come across a garden hose which has all the water you need and you can get it faster with less risk you would be foolish not to turn on the tap."

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