Pensions giant Phoenix Group is set to snap up life insurance firm Sun Life UK in a cash deal worth £248m, the firm announced this morning.
In a statement, bosses said the deal would be funded entirely off its own books and could provide a boost of £470m incremental long-term cash generation, with around 30 per cent of that to emerge in the first three years.
Phoenix Group, which has around £310bn in assets under management, has been eyeing up a spate of deals to bolster its heritage business and said that Sun Life UK represented about £10bn of the estimated £480bn of M&A opportunities in the market.
Boss Andy Briggs said the deal showed the “significant value that smaller cash funded M&A transactions can deliver for our shareholders”.
“We expect this acquisition to deliver incremental long-term cash generation of around £470 million, inclusive of cost and capital synergies,” he said.
“This supports a 2.5 per cent dividend increase, in line with our ambition to sustainably grow our dividend over time.”
Phoenix said that is had also now agreed a new long-term strategic asset management partnership with Sun Life that “complements our existing relationships”.
The deal marks the first to be funded solely off Phoenix’s own cash resources, with bosses saying they are now set for more deals with M&A a “strategic priority” for the period ahead.
Regulators are now assessing the deal, with completion expected in the first quarter of 2023.