Phoenix proposes £3.2bn acquisition of ReAssure

Phoenix Group Holdings has announced its has proposed the acquisition of ReAssure Group for £3.2bn.

The deal would increase Phoenix’s assets under administration up to £329bn across 14.1 million policies, “confirming Phoenix’s position as the largest life and pensions consolidator in Europe”, the announcement stated.

The £3.2bn payment would be satisfied through a mixture of cash and shares issues to Swiss Re and MS&AD, the shareholders in ReAssure.

Phoenix expects the proposed acquisition to generate additional cash flows of approximately £7bn, of which around £2.7bn is expected to be generated between 2020 and 2023.

The acquisition would add £84bn of assets under administration and approximately 4.1 million policies.

Following the acquisition, each of Swiss Re and MS&AD will have strategic shareholdings totalling approximately 28 per cent of the enlarged Phoenix Group.

While the total shareholding of Swiss Re and MS&AD will be fixed at approximately 28 per cent of the enlarged Phoenix Group, the anticipated shareholding of Swiss Re will be in the range of 13 per cent to 17 per cent and the anticipated shareholding of MS&AD will be in the range of 11 per cent to 15 per cent, depending on Phoenix's share price at completion.

Each of Swiss Re and MS&AD will be invited to appoint one non-executive director to the Phoenix Group Board for as long as their respective shareholdings are 10 per cent or more.

Commenting on the deal, Phoenix CEO, Clive Bannister, said: "This is a highly attractive acquisition for Phoenix that follows our growth strategy and delivers value to our shareholders.

“The acquisition will contribute £7bn of incremental cash generation and give us the opportunity to capture significant cost and capital synergies.

“The purchase price, at 91 per cent of ReAssure's pro-forma Solvency II Own Funds, is attractive; as is the efficient financing structure. Together, this enables us to maintain our balance sheet strength.

“We also welcome Swiss Re and MS&AD as significant new shareholders and see their investment as a recognition of the many benefits that this combination can bring."

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