UK-based insurer Aviva has agreed to buy Friends Life for around £5.6bn ($8.8bn), which allows the company to expand insurance, savings and asset management business.


The agreement has been reached into this effect by both the companies, on the terms of a recommended all share acquisition of Friends Life by Aviva.

Aviva said that it will issue its ordinary 25p shares to Friends Life shareholders rather than paying cash to the shareholders.

As per the terms of the possible offer, Aviva will 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.

Aviva shareholders will own around 74% of the enlarged company, while Friends Life shareholders will own approximately 26%, if the proposed combination were to proceed.

The transaction is expected to be completed in the second quarter of 2015, if the proposed acquisition is successful, according to Aviva.

Friends Life was founded as Resolution Limited by entrepreneur Clive Cowdery in 2008, and changed its name to Friends Life Group in May 2014.

Image: Aviva’s world headquarters in London. Photo: courtesy of Colin.