Takeover bid for Friends Life sparks share fall at insurance and pensions giant Aviva
Insurance and pensions giant Aviva saw its shares fall by 29p or nearly 5.4 per cent to 510p yesterday as investors absorbed the news of its £5.3billion takeover bid for Friends Life.
Shares in Friends Life travelled in the opposite direction, gaining 20.5p or almost 6 per cent to 368.2p.
The offer is an all equity bid, for 0.74 of an Aviva share for every one in Friends.
Taking it all in: Insurance and pensions giant Aviva saw its shares fall by 29p or nearly 5.4 per cent to 510p as investors absorbed news of a Friends Life takeover bid
Analyst Mark Cathcart at Jefferies said that he expected the announcement to lead to ‘initial share price weakness’ for Aviva because of the ‘strategic shock’.
Some investors had not expected Aviva chief executive Mark Wilson to expand his company in the UK because of political and regulatory concerns.
Cathcart said the deal is ‘counter-intuitive at first sight’ because it seems to run contrary to the simplifying of the group that is currently under way.
He added, however, that if the deal is successfully carried off, it will lead to ‘undisputed market leadership in UK insurance’ growth through cross-selling and a ‘double-digit increase’ in Aviva’s potential to pay dividends.
Sheridan Admans, investment research manager at The Share Centre, said the takeover could create ‘substantial synergies’ but warned it is ‘not a done deal’.
James Shuck at UBS pointed out that UK life assurance mergers are notoriously challenging and that Aviva is still dealing with past deals of its own, but added that a tie with Friends would transform its balance sheet.
Most watched Money videos
- Aston Martin unveils new Vantage sports car capable of 202mph
- How to invest to beat tax raids and make more of your money
- Iconic Dodge Charger goes electric as company unveils its Daytona
- Mini unveil an electrified version of their popular Countryman
- Would you retire abroad for cheaper living costs?
- Pair of rare 1980s Ford Sierra RS500 Coswotths head to auction
- German car giant BMW has released the X2 and it has gone electric!
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- Four in 10 mortgages are being taken out by borrowers who...
- Spirent ditches Vivai as Keysight gatecrashes deal with...
- Morrisons boss says turnaround is in 'full swing' as...
- Endeavour Mining probe finds more 'secret' payments worth...
- Competition watchdog clears Aviva's £460m acquisition of...
- Car crash victims to get faster, higher compensation...
- Trump's social media firm soared on its stock market...
- H&M profits spring back to life as it seeks to fight off...
- D-day for crypto wunderkind who crashed to earth: Sam...
- MARKET REPORT: Carnival set for record year as bookings boom
- Debt fuelled deals are bringing great British firms...
- Insurance market Lloyd's of London toasts best result 'in...
- Commodities broker Marex Group snubs City as it files...
- Trader Tom Hayes vows to fight on in bid to clear his...
- Americans crashing Mondi bid for DS Smith plot UK listing...
- BUSINESS LIVE: Recession confirmed; Thames Water survival...
- Where in the UK do homes sell fastest... and slowest?
- Thames Water shareholders refuse £500m lifeline plea