By Jakob Van Calster and Iain Withers
LONDON, April 15 (Reuters) - Standard Life has agreed to buy Dutch rival Aegon's UK business for 2 billion pounds ($2.7 billion), the companies said on Wednesday, expanding
the British pension savings group's reach to 16 million customers.
Standard Life said the cash-and-shares deal would also boost its managed assets by half to 480 billion pounds.
"This makes us by some margin the market leader in the fast-growing UK savings and retirement markets," Standard Life CEO Andy Briggs told Reuters.
Insurers and asset managers - including the likes of U.S. giants Brookfield and Apollo - have piled into the retirement and savings market in recent years in search of stable, long-term income amid wider market volatility.
Standard Life will pay 750 million pounds in cash under the deal and issue shares to Aegon equating to a 15.3% stake, making the Dutch firm its largest shareholder with a seat on the board.
Shares in Standard Life, recently rebranded from Phoenix, were up 0.8% in early trading, while Aegon was down 1.7%.
DEAL BACKED BY KEY SHAREHOLDERS, STANDARD LIFE CEO SAYS
The Dutch group had previously said it was reviewing its insurance operations in Britain, eyeing a possible sale, as part of its upcoming head office switch to the U.S. and rebranding into Transamerica.
The UK unit had also attracted reported interest from Lloyds Banking Group, Barclays and Royal Bank of Canada.
Briggs said the deal accelerates Standard Life's push into more capital-light businesses as part of its wider strategy and would lead to cost and capital synergies of around 800 million pounds.
Standard Life said strategic shareholders MS&AD Insurance Group Holdings and Aberdeen Group backed the deal.
Analysts at ING said the price was at the higher end of its expected range at around 14 times earnings and appeared to be a good deal for Aegon, which said it would use the proceeds for share buybacks and reducing debt.
Standard Life's Briggs said the transaction uses up less of its own funds than past acquisitions, adding the recent market volatility sparked by conflict in the Middle East had not affected the deal.
Aegon said the divestment was expected to cause a reduction of 5 percentage points in the group solvency ratio. It also updated its financial forecast. It now expects its free cash flow run-rate and group operating result run-rate to increase by around 5% per year between 2025 and 2027.
Yearly operating capital generation growth is seen between 0% and 5% over the same period.
Aegon reiterated that its UK asset management services would remain part of the group.
The deal is expected to close around the end of 2026, subject to regulatory approvals.
($1 = 0.7372 pounds)
(Reporting by Jakob Van Calster in Gdansk and Iain Withers in London; Editing by Milla Nissi-Prussak and Joe Bavier)
