TIDMFLG TIDMAV.
RNS Number : 7452X
Friends Life Group Limited
21 November 2014
Not for release, publication or distribution, in whole or in
part, directly or indirectly, in or into Australia, Canada, Japan,
South Africa or any other jurisdiction where it is unlawful to
distribute this announcement.
This announcement is not an announcement of a firm intention to
make an offer under Rule 2.7 of the City Code on Takeovers and
Mergers (the "Code") and there can be no certainty that an offer
will be made.
FOR IMMEDIATE RELEASE
21 November 2014
Possible All Share Combination of
Aviva plc ("Aviva") and Friends Life Group Limited ("Friends
Life")
-- Creates UK's leading insurance, savings and asset management
business[1]
-- Significantly increases cash flow and accelerates growth of
Aviva's dividend
-- Strengthens Aviva's balance sheet and reduces leverage,
creating foundation for future growth
-- Materially increases Aviva Investors' total assets under
management, increasing importance of fund management to the
group
The Boards of Aviva and Friends Life note the recent press
speculation and confirm that they have reached agreement on the key
financial terms of a possible all share combination of Aviva and
Friends Life ("Possible Offer").
The Board of Friends Life has indicated to Aviva that it is
willing to recommend the key financial terms of the Possible Offer
(as set out below) to Friends Life shareholders, subject to
reaching agreement on the other terms and conditions of any offer
and the completion of mutual due diligence. Any transaction would
be subject to regulatory approval.
A combination of Aviva and Friends Life would create the UK's
leading insurance, savings and asset management business by number
of customers, with a stronger balance sheet and significantly
higher cash flows, enhanced by substantial synergies, from which to
accelerate dividend growth.
Possible all share combination of Aviva and Friends Life
Under the terms of the Possible Offer, Aviva would acquire the
entire ordinary share capital of Friends Life on the basis of an
exchange ratio of 0.74 Aviva ordinary shares for each Friends Life
ordinary share.
The exchange ratio and indicative premium have been agreed
between the Boards of Aviva and Friends Life having taken into
account the impact of the Value Share, and the consideration due
from Friends Life to the holders of the Value Share entitlement
under the terms of the Value Share arrangement. A detailed
description of the Value Share is set out on page 74 of Friends
Life's 2013 Annual Report and Accounts, while the most recent
Friends Life net equity deployed figure is set out in Note 8 of
Friends Life's Interim Management Statement for the third quarter
2014.
In addition, the Possible Offer will be structured so that
Friends Life shareholders would receive (whether by way of dividend
or pursuant to the Possible Offer) an amount in cash equal to any
Friends Life final dividend payment for the 2014 financial year
(but would not be entitled to any additional amount in respect of
any final Aviva dividend payment for the 2014 financial year).
Based on Aviva's closing share price on 21 November 2014, the
Possible Offer represents an indicative value of approximately
398.9 pence per Friends Life share (not including the value of the
Friends Life final dividend for 2014 and the Value Share)
representing an indicative premium of 15 per cent. to Friends
Life's closing share price on 21 November 2014 and an indicative
premium of 28 per cent. to Friends Life's three month average share
price of 310.7 pence. Under the terms of the Possible Offer,
Friends Life shareholders would own approximately 26 per cent. of
the enlarged group.
Creates UK's leading insurance, savings and asset management
business
The Board of Aviva believes that the combination would create
the leading insurance and savings business in the UK with 16
million customers, who stand to benefit from being part of a
stronger and more diversified group with a wider product range. In
line with Aviva's true customer composite strategy, Friends Life's
5 million customers will benefit from Aviva's product offer in
general insurance, health, and asset management as well as life
insurance.
The transaction is also expected to lead to a substantial
increase in profits and assets under management at Aviva Investors
through the addition, over time, of Friends Life's UK assets under
management which are currently principally outsourced, materially
increasing Aviva Investors' total assets under management.
The combined business would have leadership positions across key
product areas and be better positioned to take advantage of the
evolving UK life insurance market with greater capacity to invest
and innovate. Specifically the transaction would lead to a
substantial increase in Aviva's protection value of new business,
more than double Aviva's corporate pension assets under
administration and create new opportunities by serving Friends
Life's GBP2 billion of annual pension vestings.
Accelerates Aviva's transformation and enhances dividend
growth
Over the past two years, Aviva has gone through a major
transformation, creating significant value for its shareholders.
The combination with Friends Life would accelerate Aviva's
transformation in line with its strategy of increasing group cash
flow and investing for growth in its chosen markets.
The Board of Aviva believes that the combination with Friends
Life would deliver significantly higher cash flows enhanced by
substantial synergies, principally through operating efficiencies
in the combined back books and the removal of overlapping
overheads.
The combination would accelerate the transformation of Aviva's
balance sheet, including reducing leverage and strengthening
capital and liquidity. These benefits are expected to increase the
enlarged group's financial and strategic flexibility and support
further growth of Aviva's dividends.
As required by Rule 2.6(a) of the Code, Aviva is required, by
not later than 5.00 pm (London time) on 19 December 2014, to either
announce a firm intention to make an offer for Friends Life in
accordance with Rule 2.7 of the Code or announce that it does not
intend to make an offer, in which case the announcement will be
treated as a statement to which Rule 2.8 of the Code applies. This
deadline may be extended with the consent of the Takeover Panel in
accordance with Rule 2.6(c) of the Code.
Any offer is subject to satisfactory completion of customary due
diligence. Aviva reserves the right, with the recommendation of the
Board of Friends Life, to amend the exchange ratio of Aviva
ordinary shares for Friends Life ordinary shares.
There can be no certainty that Aviva will proceed to make an
offer for Friends Life. A further announcement will be made in due
course.
Aviva Enquiries
Colin Simpson +44 (0) 20 7662 8115
Investor Relations Director
Nigel Prideaux +44 (0) 20 7662 0215
Group Communications Director
Aviva Adviser Enquiries
Morgan Stanley - Joint Financial Adviser and Corporate
Broker
Donald Moore +44 (0) 20 7425 8000
Matt Cannon
Paul Baker
JPMorgan Cazenove - Joint Financial Adviser and Corporate
Broker
Tim Wise +44 (0) 20 7742 4000
Conor Hillery
Robey Warshaw - Joint Financial Adviser
Simon Robey +44 (0) 20 7317 3900
Simon Warshaw
Finsbury
Conor McClafferty +44 (0) 20 7251 3801
Friends Life Enquiries
Yana O'Sullivan +44 (0) 845 268 3116
Director of Investor Relations
Tom Cannings +44 (0) 845 268 5139
Investor Relations
Friends Life Adviser Enquiries
Goldman Sachs - Financial Adviser
John Rafter +44 (0) 20 7774 1000
Mark Sorrell
Paul Miller
Barclays - Financial Adviser and Corporate Broker
Jim Renwick +44 (0) 20 7623 2323
Ben Davey
Tom Boardman
RBC Capital Markets - Financial Adviser and Corporate Broker
Oliver Hearsey +44 (0) 20 7653 4000
Kevin Smith
Bell Pottinger
Ben Woodford +44 (0) 20 7861 3917
Olly Scott +44 (0) 7812 345 205
Important notices relating to financial advisers
Morgan Stanley & Co International plc, which is authorised
and regulated by the Financial Conduct Authority and the Prudential
Regulatory Authority, is acting as joint financial adviser to Aviva
and no one else in connection with the contents of this
announcement and will not be responsible to anyone other than Aviva
for providing the protections afforded to its clients or for
providing advice in connection with the contents of this
announcement or any matter referred to in this announcement.
JP Morgan Cazenove Limited, which is authorised and regulated by
the Financial Conduct Authority and the Prudential Regulatory
Authority, is acting as joint financial adviser to Aviva and no one
else in connection with the contents of this announcement and will
not be responsible to anyone other than Aviva for providing the
protections afforded to its clients or for providing advice in
connection with the contents of this announcement or any matter
referred to in this announcement.
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Robey Warshaw LLP, which is authorised and regulated by the
Financial Conduct Authority, is acting as joint financial adviser
to Aviva and no one else in connection with the contents of this
announcement and will not be responsible to anyone other than Aviva
for providing the protections afforded to its clients or for
providing advice in connection with the contents of this
announcement or any matter referred to in this announcement.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting for Friends Life and no one else in
connection with the matters referred to in this announcement and
will not be responsible to anyone other than Friends Life for
providing the protections afforded to clients of Goldman Sachs
International, or for providing advice in connection with the
matters referred to in this announcement.
Barclays Bank PLC, which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority in the United
Kingdom, is acting for Friends Life and no one else in connection
with the matters referred to in this announcement and will not be
responsible to anyone other than Friends Life for providing the
protections afforded to clients of Barclays Bank PLC, or for
providing advice in connection with the matters referred to in this
announcement.
RBC Europe Limited (trading as RBC Capital Markets), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting for Friends Life and no
one else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than
Friends Life for providing the protections afforded to clients of
RBC Capital Markets, or for providing advice in connection with the
matters referred to in this announcement.
Neither this announcement nor any copy of it may be taken or
transmitted directly or indirectly into Australia, Canada, South
Africa or Japan or to any persons in any of those jurisdictions,
except in compliance with applicable securities laws. Any failure
to comply with this restriction may constitute a violation of
Australian, Canadian, South Africa or Japanese securities laws. The
distribution of this announcement in other jurisdictions may be
restricted by law and persons into whose possession this
announcement or other information referred to herein comes should
inform themselves about, and observe, any such restrictions.
This announcement is not intended to, and does not, constitute,
represent or form part of any offer, invitation or solicitation of
an offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
This announcement is not an offer of securities in the United
States.
The securities to which this announcement relates have not been
and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act") or with any regulating authority
or under any applicable securities laws of any state or other
jurisdiction of the United States, and may not be offered or sold
within the United States unless registered under the Securities Act
or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and in
compliance with applicable state law. The securities mentioned
herein are expected to be issued in reliance upon the exemption
from the registration requirements of the Securities Act provided
by Section 3(a)(10) thereunder.
Disclosure requirements of the Code
In accordance with Rule 2.10 of the City Code, Aviva confirms
that, as at the date of this announcement, it has in issue
2,947,774,242 ordinary shares of 25p each (excluding ordinary
shares held in treasury). The International Securities
Identification Number (ISIN) of the ordinary shares is
GB0002162385.
In accordance with Rule 2.10 of the City Code, Friends Life
confirms that, as at the date of this announcement, it has in issue
1,411,977,028 ordinary shares of no par value. The International
Securities Identification Number (ISIN) of the ordinary shares is
GG00B62W2327.
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified.
An Opening Position Disclosure must contain details of the
person's interests and short positions in, and rights to subscribe
for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by
no later than 3.30 pm (London time) on the 10th business day
following the commencement of the offer period and, if appropriate,
by no later than 3.30 pm (London time) on the 10th business day
following the announcement in which any securities exchange offeror
is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange
offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror, save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication of this announcement
A copy of this announcement will be made available subject to
certain restrictions relating to persons resident in restricted
jurisdictions on Aviva's website (www.aviva.com) and on Friends
Life's website (www.friendslifegroup.com) no later than 12 noon on
22 November 2014.
The content of the websites referred to in this announcement is
not incorporated into and does not form part of this
announcement.
[1] By number of customers and profits
This information is provided by RNS
The company news service from the London Stock Exchange
END
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