Standard Life PLC (LSE:SL.) has agreed to acquire Dutch insurance giant Aegon's UK arm for £2 billion, helping it close some of the gap with larger retirement savings rivals Aviva and Legal & General.
The insurer, fresh from rebranding from Phoenix Group last month, said the deal will add around £160 billion of assets under administration and 3.8 million customers, taking the combined total to about £480 billion and 16 million customers.
A combination of debt, cash and new shares will be used to fund the deal, with The Hague-headquartered Aegon taking a 15.3% stake in the enlarged group.
Standard Life calculated that it will extract £110 million of annual cost savings and £340 million of capital synergies, with operating profit predicted to rise by around £190 million a year, with an additional £160 million of annual cash generation.
The deal also shifts the business further towards fee-based earnings. These are revenues earned from managing customer assets rather than holding capital-heavy insurance risks.
Chief executive Andy Briggs said: "Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK's leading retirement savings and income business."
Aegon chief executive Lard Friese said: "Standard Life is the right owner for Aegon UK: we share the same values and a strong commitment to customers, and together the businesses will create the UK's largest retirement savings and income provider."
Completion is expected by the end of 2026, subject to regulatory approval