Legal & General unveiled plans to buy out the unit trust and life insurance business of Nationwide Building Society yesterday, in a deal which will secure the UK insurer new distribution for their products across Nationwide's 860 UK branches.
L&G will pay Nationwide around £285m for the business, which has life and unit trust assets of more than £3.5bn, as well as some £19bn of protection business. The final valuation will not be determined until the deal completes in the summer.
Nationwide's executive director, Stuart Bernau, said the company took the decision to sell off its protection and investments businesses last year, to focus on distribution.
"As a result of that, we started to consider who would be the best strategic partner for us, and after an extensive search, Legal & General came out on top," he said.
Mr Bernau said the proceeds would be ploughed into improvingNationwide's branch network, as well as on upgrades to its IT infrastructure.
L&G's chief executive Tim Breedon said he expected the deal to eventually add around 10 per cent to sales in its life insurance division.
Nationwide employs some 270 staff based in Swindon, in its life and investments division - all of whom will transfer to L&G as part of the deal.
Mr Breedon said L&G would be investing several million pounds in integrating IT systems and training staff to ensure the smooth integration of the acquisition.
He conceded that while L&G's strategy is mainly focused on organic growth, the company remains interested in deals which will provide it with new distribution.
The market reacted positively to the deal yesterday, with shares in the company closing up just over 1 per cent at 161.25p, close to the six-year highs hit at the end of last month.Reuse content