Aviva and Friends Life merger

October 10th, 2019

London, April 24, 2015

Insurance group Aviva merged with Friends Life group to form newly operating Aviva and Friends Life.

The £11bn turnover Friends Life was acquired on the 13th April 2015 by Aviva, in a takeover that cost Aviva £5.6bn. The merged company has now been confirmed and is trading as of the 14th April 2015.

Aviva’s share price rose by nearly 2% after the announcement that the merger had been successfully completed, making it one of the biggest rising share listings of the day.

The analysts at Barclays had been quite for a few days, as they were part of the team advising the merger between Aviva and Friends Life, but with the merger announced publically, they have changed Aviva’s rating from ‘underweight’ to ‘overweight’ due to the strengthened balance sheet and the improved (reduced) leverage ratio. The Barclays analysts also suggested that Friends Life would help Aviva’s cash generation.

Barclay’s analysts also commented on the deal Aviva got for Friends Life, and said that they thought Friends Life was an underappreciated, cash generative asset that they had got for an excellent price. They also believe Friends Life had very little gearing and as an asset rich business, would help Aviva to reduce their own gearing in turn.

Statistical ratings organisation Fitch Ratings have said that they believe the management team, resources, facilities and experienced staff will be capable of bringing about the changes set out.

The merger will potentially have some unpleasant outcomes for workers of the firms, as plans have been announced to get rid of around 1500 jobs as part of the £233m in costs that are planned annually after the companies are integrated in 2017.

From an enlarged workforce of 31,000 employees post merger, the company has not highlighted any particular teams that the job cuts will be aimed at, and have said they will be as organic as possible.

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