Insurers Aviva and Friends Life have agreed terms for a possible all-share merger, with Aviva offering Friends shareholders a 15% premium for a 26% share in the merged entity.
Aviva’s shares fell, and Friends rose on the news. Analysts say the merger is a good fit in the pensions and life insurance sectors, and immediate savings should recoup the cost of the merger for Aviva.
However both companies are in turnaround so the merger comes at an unusual time, with at least one broker dismissing it as an Aviva bid to disguise what was a stealthy rights issue.
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