Standard Life is acquiring Aegon UK in a £2 billion combination of two Scottish brands that will create the UK’s largest retirement savings and income business.

The combination will have £480 billion in assets under administration and 16 million customers.

Standard Life, formerly known as Phoenix Group, will pay £750 million in cash for the business and issue 181.1 million new shares to Aegon which will be the largest shareholder in Standard Life, with a 15.3% stake. It will be entitled to appoint one non‑executive director to the group’s board.

The deal is projected to deliver £800m in net synergy value and generate £160 million in additional operating cash generation annually. There are likely to be ‘modest’ job cuts resulting from £100 million of savings, according to Standard Life chief executive Andy Briggs.

Phoenix recently rebranded as Standard Life eight years after acquiring the business from what was Standard Life Aberdeen [now Aberdeen Group].

It was among those mentioned as a potential buyer of Aegon’s UK business which has been based in Scotland for more than 30 years after acquiring Scottish Equitable.

Aegon, based in The Netherlands, put its UK operations up for sale before Christmas as part of a restructuring that will see the group move its headquarters to the US and rebrand as Transamerica.

The new Standard Life group operates under a number of brands, including Sun Life, Reassure, and Phoenix Life.

Phoenix CEO Andy Briggs 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.”

Standard Life’s share price closed up 15.25p, or 2.1%, at 729p, valuing the company at £7.3 billion.

Nasib Ahmed, an analyst with UBS, said: “The strategic and financial rationale makes sense to us.”

Comment: Standard Life’s phoenix-like revival