Resolution Holders Approve GBP2.75B Deal To Buy AXA UK Assets

20th Jul 2010 11:55

By Vladimir Guevarra Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Resolution Ltd (RSL.LN), the consolidation vehicle founded by insurance entrepreneur Clive Cowdery, on Tuesday said its shareholders approved a GBP2.75 billion deal to buy some of French insurer AXA SA's (CS.FR) U.K. life operations, reinforcing Resolution's aim to build a dominant U.K. life insurer through the merger of several companies. Under the deal, expected to close in the third quarter, Resolution will buy AXA's U.K. annuity, protection and group pensions businesses, funding the purchase with a pre-emptive GBP2.055 billion rights issue, GBP500 million in deferred consideration notes issued to AXA and through bank debt. About 2,200 AXA employees will make the switch to Resolution. The U.K. consolidator said the purchase of the AXA U.K. assets and the rights issue were supported by more than 99% of voting shares from shareholders during a general meeting in Guernsey. The approval from shareholders was well-expected and comes just over a month after U.K. insurer Prudential PLC (PRU.LN) failed in its ambitious $35.5 billion bid for AIA Group Ltd., the Asian arm of American International Group Inc (AIG). That deal fell apart when Prudential's shareholders balked at the $21 billion they were asked to put up to help fund the takeover. The AXA operations will be merged with Friends Provident, the life insurer bought by Resolution last year for GBP1.86 billion, and rebranded as "Friends Life." The purchase marks the continuation of Resolution's strategy to consolidate companies in the U.K. life insurance and asset management industry, with the aim of listing a new merged entity in 2013. Resolution is hoping to create cost and revenue synergies between the companies it buys and build a bigger and more competitive company. Last month, Resolution called the move a "logical next step" in its strategy that will double its market share in the U.K. life and pensions market. Resolution Operations CEO John Tiner said the AXA transaction puts the group more than halfway toward its goal to build a life and asset management group with market consistent embedded value of around GBP10 billion. The combined business of Friends Provident and AXA U.K. will have around GBP6 billion in MCEV. Resolution also said a planned share consolidation will start Wednesday, with 30 shares consolidated into one share. At 1048 GMT GMT, Resolution shares were down 3% at 66 pence. while the FTSE 100 index was down 0.6%. -By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0) 2078429486, [email protected] (END) Dow Jones Newswires July 20, 2010 06:55 ET (10:55 GMT)