Phoenix Group has agreed to acquire Axa Wealth’s pensions and protection businesses through its subsidiary Pearl Life for £375m, the firm has announced.
The acquisition will add £12.3bn of assets under management and about 910,000 policies to the group, and is expected to generate cashflows of £0.3bn in the first four years.
Phoenix will fund the deal from a £190m equity placing and a new short-term debt facility and is subject to regulatory approval.
The firm expects to generate cost synergies of £10m from 2017, following initial integration costs of £25m.
The deal follows a strategic review and the sale of Axa’s adviser platform Axa Elevate to Standard Life early in May.
The acquisition confirms previous speculation, Axa and Phoenix had come to an agreement on the SunLife and Embassy sale.
The majority of the £12bn assets pensions and investments business Embassy will be closed to new customers following the deal, with the exception of the Corporate Trustee Investment Plan product.
Meanwhile, Axa has also made changes to its management team, which will see UK chief executive Paul Evans appointed to the wider AXA group management committee with responsibility for the global life business. He will be succeeded by Amanda Blanc from July.
He said: “The acquisition of the Embassy and SunLife businesses represents another important step forward in Phoenix’s growth strategy. The transaction meets our acquisition criteria and will generate additional cash for the group which supports the proposed increase in Phoenix’s dividend.
“The Group has extensive integration experience and expertise and we believe that both the Embassy and SunLife businesses are a strong fit, benefitting both shareholders and policyholders alike.
“We will invest heavily to ensure a smooth transition of the two businesses from AXA to Phoenix and we are committed to delivering the highest level of service to both direct and IFA customers, as we do for our existing customers. Looking ahead, we believe there will be further consolidation in the UK life industry and we will continue to explore further opportunities as they arise.”
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