FTSE 100 giants Aviva (LSE: AV) (NYSE: AV.US) and Friends Life (LSE: FLG) have announced that they are in talks over a possible tie-up to combine both companiesinto the UKs leading insurance, savings and asset management business.
The news broke late on Friday afternoon after the market had closed. Both boards have confirmed that they have reached agreement on the key financial terms of a possible all share combination, which would seeAviva 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 offer represents a value of approximately 398.9p per Friends Life share (not including the value of the Friends Life final dividend for 2014) representing an indicative premium of 15% to Friends Lifes closing share price on 21 November and a premium of 28% to Friends Lifes three-month average share price of 310p.
If the 5.6bn touted deal goes ahead, the enlarged company would see a stronger balance sheet and significantly higher cash flows, leading in turn to an accelerated growth of Avivasdividend.
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Sam Robson has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
