British insurers Resolution and Friends Provident have agreed an all-share merger to create Friends Financial Group, a life assurer with a market value of £8.6 billion sterling.
The two firms, which said on Monday they were in merger talks, said the deal would generate at least £100 million in annualised pretax cost savings and synergies by the end of 2010 and that it would boost earnings per share by 2009 for both sets of shareholders.
They said today that Resolution shareholders would get 3.25 new Friends Financial shares for each of their own shares and that Resolution investors would own 50.9 per cent of the new group and Friends Provident investors 49.1 per cent.
Resolution Chairman Clive Cowdery and Chief Executive Mike Biggs will hold the same positions in the combined group. Friends Provident's Chairman Adrian Montague and Chief Executive Philip Moore will deputise those positions respectively.
They also plan to combine Resolution Asset Management (RAM) with F&C Asset Management, which is 51 per cent owned by Friends Provident, on terms to be agreed with F&C. They expect F&C to remain separately listed.
F&C said in a separate statement that it estimated annualised cost savings of about £26 million pounds before tax could be achieved from combining with RAM.