Standard Life group CEO Andy Briggs
Standard Life has acquired Aegon UK for £2bn in a deal which will create the UK’s largest savings and income business with some 16 million customers and £480bn of assets under administration (AUA).
The deal will be funded through a combination of debt, cash and the issue of new shares in Standard Life, which will form about 15.3% of the group's enlarged share capital. As part of the deal, Aegon will become a strategic shareholder and asset management partner of Standard Life.
Standard Life said the combination of what it said were two "highly complementary businesses" accelerates its vision to be the UK's leading retirement savings and income business, while at the same time strengthening its cash, capital and earnings position.
It said the deal was expected to increase its operating cash generation and operating profit by approximately £160m per annum and to deliver £400m of additional excess cash over the five years following completion.
Standard Life noted that the deal "transforms" it from a smaller retail provider to the UK's second largest retail pensions and savings platform by assets, adding £86bn AUA and 1.8m customers.
"[It] creates a modern, scaled adviser led retail proposition, underpinned by a robust adviser platform that strengthens defence against outflows and supports sustainable growth," the provider stated.
It also said that its purchase of Aegon UK enhances Standard Life's product offering through a broader suite of savings and investment solutions, including the potential to integrate tax wrappers such as offshore and onshore bonds, delivering a more differentiated market proposition.
"[The deal] strengthens customer and adviser engagement through digital tooling and AWS enabled data capabilities, supporting more informed decision making and optimised customer and adviser experiences," Standard Life set out.
Standard Life said Aegon UK allows it to increase the accessibility of its off platform solutions through Standard Life's platform technology, and "complements and increases accessibility" for financial advisers.
Workplace pensions
Standard Life said the transaction would establish it as the UK's second largest workplace pensions platform by assets and customers – adding some £74bn AUA to the firm's existing £71bn workplace offering – and move it to become the UK's second largest retail pensions and savings platform.
It said the deal would expand its workplace administration and distribution capabilities through increased reach across corporate advisers and adviser-led employer segments, areas it said were "structurally growing" parts of the UK defined contribution market.
The firm said it would also improve end-to-end workplace outcomes by linking savings, engagement and service more effectively with downstream retail consolidation and decumulation pathways.
Standard Life group CEO Andy Briggs said: "Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK's leading retirement savings and income business. We will be in an even stronger position to meet the evolving needs of our 16 million customers with enhanced digital, advice and distribution capabilities across workplace and retail, strengthening our standing in one of the world's most attractive markets.
"Furthermore, the transaction accelerates our shift to capital-light whilst strengthening our cash, capital and earnings position to create increased value for shareholders.
"With financial wellbeing at the heart of everything it does, Aegon UK's values and culture are aligned with our own. Together, we will not only be stronger, we will be better - helping our customers achieve better outcomes and greater financial security in later life. I look forward to welcoming everyone at Aegon UK to Standard Life in due course and working together to capture the huge potential in front of us."
This article was first published on Professional Adviser sister title Professional Pensions
