Phoenix Confirms Talks With Deutsche Bank on Abbey Life Deal

Updated on
  • Phoenix said planning to raise $1.1 billion to fund purchase
  • German bank has been reviewing options for Abbey Life unit

Phoenix Group Holdings said it’s in “advanced talks” with Deutsche Bank AG to buy the German lender’s Abbey Life Assurance Co. U.K. insurance business.

There’s no certainty that the talks will lead to a transaction, Phoenix said in a statement on Friday, confirming an earlier Bloomberg report. The Jersey-based consolidator of closed-life insurance businesses is planning to raise about 800 million pounds ($1.1 billion) to help fund the purchase, a person with knowledge of the matter said on Thursday.

Clive Bannister

Photographer: Frantzesco Kangaris/VisMedia/Phoenix Group Holdings

Phoenix Chief Executive Officer Clive Bannister, who joined in 2011 to cut costs and tackle its debt burden, has said that he’d be interested in buying Abbey Life if the unit was put up for sale. The CEO earlier this year completed the purchase of Axa SA’s U.K. pension and protection business for 375 million pounds, partly funded through a share placement.

“This deal could be the making of Phoenix as an acquisition vehicle for closed life funds,” Eamonn Flanagan, an analyst at Shore Capital Group with a hold recommendation on Phoenix shares, wrote in a note to clients. “Figures quoted in the past suggested that Abbey Life’s embedded value was close to 2 billion pounds with the purchase price mooted at 1 billion pounds.”

The companies are set to finalize the deal within the next couple of weeks, according to people familiar. Officials for Deutsche Bank declined to comment.

Deutsche Bank CEO John Cryan is under pressure to shore up earnings and bolster capital buffers at the German lender. Abbey Life is among several U.K. life assurance businesses that are being investigated by the Financial Conduct Authority over its practices on exit fees. Swiss Re AG and Britain’s Legal & General Group Plc were among firms considering bids for Abbey Life, people familiar with the matter had said in April.

Phoenix shares rose 0.3 percent to 844 pence after climbing 1.5 percent on Thursday. They have dropped about 8 percent this year.