LONDON: Standard Life plc has entered into an agreement to acquire Aegon UK plc, containing the UK insurance and pensions operations of Aegon Europe Holding B.V., for a total consideration of £2.0 billion.
The Transaction will be funded through a combination of debt, cash and the issue of new ordinary shares in Standard Life (representing approximately 15.3% of the Group’s enlarged share capital) to Aegon on completion, with Standard Life welcoming Aegon as a new strategic shareholder and asset management partner.
Key Transaction Highlights
· Creates UK’s largest retirements savings and income business:
– Combined group to become #2 in UK Workplace and #2 in UK Retail
– Enlarged group will have 16m customers and Assets Under Administration (“AUA”) of c.£480bn
· Significantly strengthens Standard Life’s Pension and Savings capabilities and customer offering:
– Increases advice, distribution and digital capabilities across Workplace and Retail
– Transforms adviser offering by securing a proven platform
– Enhances ability to meet evolving customer needs
· Materially unlocks value and accelerates the shift to capital-light:
– Delivers total net synergy value of £0.8bn, comprised of £110m of run-rate pre-tax cost synergies and c. £340m of one-off capital synergies, underpinned by Standard Life’s experience in large and complex life insurance integrations
– Operating profit contribution from capital-light, fee based growth earnings increases from 47% as at FY25 standalone, to 57%2 for the enlarged group (on a pro-forma basis post synergy realisation)
· Unlocks attractive financial outcomes that creates value for shareholders:
– Cash: +£160m Operating Cash Generation3 growing in line with our mid-single digit % guidance and incremental excess cash generation of £0.4bn over 5 years (after financing and one-off costs) increasing future flexibility to invest or return capital
– Capital: Maintain position at upper end of Solvency II Coverage Ratio
– Earnings: +£190m IFRS adjusted operating profit4 and mid-single digit accretive to adjusted operating EPS by 20295
· An efficient funding structure that maintains Standard Life’s capital strength:
– Attractive valuation – 0.83x P/UT1 on the basis of Aegon UK UT1 of £2.4bn for FY2025
– Combination of debt, cash and newly issued shares consistent with existing Solvency II (SII) leverage ratio target of c.30%
Commenting on the Transaction, Andy Briggs, Group CEO of Standard Life, said: “Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business. We will be in an even stronger position to meet the evolving needs of our 16 million customers with enhanced digital, advice and distribution capabilities across Workplace and Retail, strengthening our standing in one of the world’s most attractive markets. Furthermore, the transaction accelerates our shift to capital-light whilst strengthening our cash, capital and earnings position to create increased value for shareholders.
With financial wellbeing at the heart of everything it does, Aegon UK’s values and culture are aligned with our own. Together, we will not only be stronger, we will be better – helping our customers achieve better outcomes and greater financial security in later life. I look forward to welcoming everyone at Aegon UK to Standard Life in due course and working together to capture the huge potential in front of us.”
Lard Friese, Aegon CEO, commented: “Standard Life is the right owner for Aegon UK: we share the same values and a strong commitment to customers, and together the businesses will create the UK’s largest retirement savings and income provider. The businesses are complementary and the combination offers an excellent outcome for Aegon UK’s customers and colleagues. Aegon’s shareholding will provide an opportunity to participate in the future success of the enlarged group.”
Key Terms of the Transaction
· Under the terms of the Transaction, Standard Life will acquire 100% of Aegon UK for a total consideration of £2.0bn. The consideration implies a valuation of 0.83x Price to UT1 for Aegon UK of £2.4bn as at FY25.
· The total consideration will be financed through:
o cash consideration of £750m, financed through a combination of £650m debt issuance to be issued prior to completion and cash resources; and
o the issuance to Aegon of 181.1m newly issued shares in Standard Life at completion of the Transaction (“Completion”).
· The number of shares to be issued by Standard Life to Aegon has been determined using a 30-day Volume Weighted Average Price as at the time of Standard Life’s binding offer of 690 pence.
· Newly issued shares to Aegon on Completion will result in Aegon becoming a 15.3% shareholder in the enlarged group. This holding is subject to a lock up ending on the earlier of: (a) 18 months from Completion; and (b) the completion of the re-domiciliation of Aegon’s ultimate holding company to the US (expected to be 1 January 2028).
· The relationship agreement with Aegon entitles Aegon to appoint a non-executive director to the Board and underpins the strategic asset management partnership between Aegon and Standard Life
· The transaction is subject to certain regulatory conditions and is expected to complete around end 2026.
· Standard Life’s existing strategic shareholders, MS&AD Insurance Group Holdings, Inc and Aberdeen Group Plc are supportive of the strategy and remain committed to their shareholdings. The potential for significant value creation of the enlarged group is attractive for them, and we look forward to continuing the development of our already close association with both.
Strategic Impacts of the Transaction
· The combination of these two highly complementary businesses accelerates Standard Life’s vision to be the UK’s leading retirement savings and income business and the shift towards capital-light, Pensions and Savings earnings.
· Standard Life’s commitment to allocating £200m capital per annum to annuities is unchanged by the Transaction and the Group continues to explore opportunities to participate further in the attractive pension risk transfer market in a capital-light way.
Workplace: Transaction elevates Standard Life to #2 player in growing UK market
· Establishes Standard Life as the UK’s second largest workplace pensions platform by assets; adding £74bn AUA and 2.1m customers6 to the existing £71bn Workplace offering.
· Strengthens the proposition through innovative accumulation and at retirement offerings, supporting employers and members across the full savings lifecycle.
· Enhances customer service through technology enabled administration and telephony, underpinned by a shared focus on customer excellence and consistent outcomes.
· Expands administration and distribution capabilities through increased reach across corporate advisers and adviser-led employer segments, a structurally growing part of the UK Defined Contribution market.
· Improves end to end workplace outcomes by linking savings, engagement and service more effectively with downstream retail consolidation and decumulation pathways.
· £18bn pro-forma gross annual flows for year ending 31 December 2025.
Retail: Transaction transforms Standard Life into #2 player in the UK market
· Transforms Standard Life from a smaller retail provider to the UK’s second largest retail pensions and savings platform by assets; adding £86bn AUA and 1.8m6 customers.
· Creates a modern, scaled adviser led retail proposition, underpinned by a robust adviser platform that strengthens defence against outflows and supports sustainable growth.
· Enhances Standard Life’s product offering through a broader suite of savings and investment solutions, including the potential to integrate tax wrappers such as offshore and onshore bonds, delivering a more differentiated market proposition.
· Strengthens customer and adviser engagement through digital tooling and AWS enabled data capabilities, supporting more informed decision making and optimised customer and adviser experiences.
· Leverages combined digital infrastructure by integrating the sophistication of Mylo with Standard Life’s digital platforms, enabling consolidation, personalised communication and pre retirement guidance.
· Aegon UK allows Standard Life to increase the accessibility of our off platform solutions through Standard Life’s platform technology, and complements and increases accessibility for Financial Advisers.
· £12bn pro-forma gross annual flows for year ending 31 December 2025.
Financial Impacts of the Transaction
· Adds approximately £160bn of AUA and 3.8m customers to Standard Life, creating an enlarged group with approximately £480bn of AUA and 16m customers, establishing Standard Life as the UK’s largest retirement savings and income business.
· Expected to increase Group Operating Cash Generation by £160m per annum and IFRS adjusted operating profit by approximately £190m per annum, and to deliver £400m of additional excess cash over the five years following Completion, increasing financial flexibility.
· Any excess cash generated will be allocated in line with Standard Life’s existing capital allocation framework.
· Expected to unlock significant long‑term shareholder value through recurring and non‑recurring synergies:
o Recurring pre‑tax cost synergies of £110m per annum, with over half delivered by end‑2029 and the remainder by end‑2031, primarily from rationalisation of combined group operations and head office costs and alignment of operating platforms and proposition.
o Non‑recurring capital synergies of £340m, expected to arise from capital diversification benefits and harmonisation of capital models.
o One‑time post‑tax integration costs of approximately £0.3bn, together with £0.1bn of additional post-tax separation costs.
o The total net synergy value of £0.8bn comprises capital synergies and the implied value of cost synergies (calculated as after‑tax annual synergies capitalised over a 10‑year period), net of integration and separation costs.
· Expected to be mid‑single digit accretive to adjusted operating earnings per share by 2029.
· Financing structure maintains balance sheet strength, consistent with the Group’s c.30% Solvency II leverage target.
· On Completion, the Transaction is anticipated to deliver a single‑digit uplift to the Shareholder Capital Coverage Ratio (SCCR) and a £1.25 billion increase in IFRS shareholders’ equity.
· Expected to further underpin the Group’s progressive and sustainable dividend policy on a per‑share basis
Aegon UK is a leading UK savings and retirement platform
· Aegon UK operates a scaled, interconnected platform model across Workplace, Adviser and Advice, which supports customer acquisition, consolidation flows and recurring fee‑based income:
o The Workplace platform: Provides retirement solutions for large and medium‑sized employers and holds a top‑five market position.
o The Adviser platform: A top‑10 UK platform for long‑term savings and investment solutions, with a strategic focus on Target-500 adviser firms that drive the majority of gross flows.
o The Advice franchise: Delivers financial planning guidance and regulated advice to Workplace customers and corporate partners and supports net flows into the Adviser platform.
· Aegon UK operates in structurally expanding areas of the UK long‑term savings and retirement market and leverages its interconnected platform model to drive increased customer flows, higher combined AuA and enhanced remittances over time.