pounds 2.5bn merger for Irish Life

IRISH LIFE, Ireland's biggest life insurer, yesterday unveiled its long-awaited merger with Irish Permanent, the country's largest mortgage lender, in an Ipounds 2.8bn (pounds 2.5bn) deal, writes Andrew Garfield.

For legal reasons, the deal is structured as a takeover of Irish Life by Irish Permanent. Irish Life shareholders will get 67.3 per cent of the enlarged group while Irish Permanent shareholders will get 32.7 per cent.

Abbey National, Britain's second-largest mortgage lender, which holds 9 per cent of Irish Permanent, will see its stake diluted to 4.8 per cent. Shares in Irish Permanent rose 17.5p to 867.5p yesterday.

The new group will be renamed Irish Life & Permanent and will be Ireland's largest financial services group with 1.5m customer relationships.

It will be headed by Conor McCarthy, the chairman of Irish Life, and John Bourke, the chairman of Irish Permanent, who together serve as joint non-executive chairmen until May 2000. At that time, Roy Douglas, Irish Life's current chief executive, will take over as sole non-executive chairman.

David Went, the former Coutts and Ulster Bank executive who joined Irish Life as managing director in January, will be chief executive of the combined group.

The group said it expects to save Ipounds 12m a year within two years. However, Mr Went said yesterday: "Job losses will be minimal."