Resolution acquires Axa Life for £2.75bn

Buyout vehicle Resolution has bought Axa Life for £2.75bn in a deal part-funded by a rights issue of approximately £2.05bn.

The deal comprises £2.25bn in cash and up to £500m in deferred consideration notes to be issued by Axa, with investors agreeing to sub-underwrite 52% of the cash call.

It will be financed by a rights issue of approximately £2.05bn, with the remaining amount coming from a fund acquisition finance facility.

Axa Life CEO Paul Evans will become Axa UK deputy chief executive, while Axa Wealth chief executive Mike Kellard will join the Axa UK board.

The deal sees Resolution acquire Axa's traditional life and pensions book, IFA protection and group pension business.

Axa Wealth, which comprises comprises of its wrap proposition Elevate, Architas Multi-Manager, Axa Wealth International, and the AXA Winterthur specialist investment and pensions businesses, is unaffected by the deal. The same is true of Axa Insurance, Axa PPP healthcare and Bluefin.

Axa UK says the decision to accept Resolution's approach follows its intention to increase its focus on "RDR-ready" Axa Wealth, in an "acceleration of its new model strategy".

It says the move follows a review of life operations which concluded Axa UK should centre on its wealth management business which employs over 3,000 people. It adds the potential transaction "does not call into question" its long-term commitment to the UK market.

In a statement, Resolution said the acquisition represents a logical "next step".

"The businesses being acquired have a good operational fit with Friends Provident and provides increased scale in the key product areas of protection and corporate pensions, as well as an enhanced opportunity in the annuity market," it said.

Resolution added under the rights issue, investors will be offered 17 new shares for every share they hold at 150 pence each.