Phoenix Is in Talks to Buy Standard Life Insurance UnitBy , , , and
Transaction is said to be valued at about $4.2 billion
Phoenix planning capital increase of about 1 billion pounds
Phoenix Group Holdings is in advanced talks to buy Standard Life Aberdeen Plc’s insurance unit for about 3 billion pounds ($4.2 billion), people with knowledge of the matter said, as the company seeks to bolster growth through acquisitions.
Phoenix plans to raise about 1 billion pounds of capital to help pay for the deal, which could be announced as early as Friday, the people said, asking not to be identified as the discussions are private. Standard Life is set to receive a 20 percent stake in Phoenix as part of the cash-and-share deal, the people said.
No final agreement has been reached, and the talks could still fall apart, the people said. Representatives for both firms declined to comment.
"Both sides are the winners if this deal is done on a constructive basis at the right price," said Trevor Moss, a London-based analyst at Berenberg Bank.
Phoenix is set up to make acquisitions. And Standard Life wants to focus on asset management, so it doesn’t make sense for the company to carry legacy insurance assets, Moss said.
The companies already have a relationship after Standard Life agreed in 2014 to buy Ignis Asset Management from Phoenix, and it helps manage certain assets. The purchase of the insurance business is likely to bolster that relationship, the people said.
The discussions come after Lloyds Banking Group Plc and Standard Life ended talks over merging their insurance businesses after they disagreed over control of the combined entity, a person with knowledge of the matter said at the time.
Phoenix bought Deutsche Bank AG’s Abbey Life Assurance Co. and Axa SA’s U.K. pension and protection business in 2016 as it seeks to grow through deals. Phoenix is a Jersey, Channel Islands-based consolidator of blocks of life insurance. Companies still collect premiums and pay claims on such contracts, even if they are not issuing new policies.
— With assistance by Ambereen Choudhury, and David Hellier