Resolution To Buy Out AXA UK Life Business - Insurance, UK
In an announcement Thursday, Resolution Ltd and AXA SA said they had reached a deal in which Resolution would buy off AXA UK Life Business by FPH, a subsidiary undertaking of Resolution.
[UKPRwire, Tue Jun 29 2010] In an announcement Thursday, Resolution Ltd and AXA SA said they had reached a deal in which Resolution would buy off AXA UK Life Business by FPH, a subsidiary undertaking of Resolution. In the investment deal, FPH consented to the takeover of the AXA UK Life Business by agreeing to buy all issued shares of AXA Sun Life Holdings Limited and Winterthur Life UK Limited, correspondingly. Resolution had reported on June 14th that it was in talks over an acquisition investment of the French insurance company AXA SA’s UK operations in the risk areas of protection, annuities and its group pensions business at estimated investment worth £2.75 billion.
The deal consideration would factor in £2.224 billion that would be paid in cash to the seller upon conclusion of the sale, a further £26 million to be remitted in cash as well upon conclusion of particular steps that were agreed upon in a post completion reorganization agreement, and an additional up to £500 million, to be made up of Deferred Consideration Notes that will be issued to the seller.
However, the investments deal also includes the reduction of the consideration if less than £1 billion of AXA’s reattributed inherited estate is available for release in 2011 but if none of the considered estate is available, then the consideration would decline to £2.6 billion, the Group noted. Resolution expects to finance the cash considerations for the investment, in addition to the associated expenses using the proceeds it will attain from the Rights Issue, the Acquisition Finance Facility and existing funds of the RSL Group.
Pundits earlier suggested that Resolution might have proceeded with the investment deal with the French company after it became apparent that the UK division of life and pensions giant, Prudential, was no longer interested on the sale. In May, Prudential failed in its £24 billion bid to buy out AIA, the Asian arm of AIG. Resolution’s total new business written in 2009 in respect of the acquired business had an APE of approximately 499m, with a gross value of 37m.
Resolution Operations Chief Executive, John Tiner, said the enlarged group will be well placed to create value from enhanced cash flow, considerable synergies and selected profitable new business. The acquisition is expected to complete in September and is subject to a number of conditions, including approval of change of control by the FSA. Both Resolution and AXA have held detailed discussions with the FSA. Resolution added under the rights issue, investors will be offered 17 new shares for every share they hold at 150 pence each.
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