Resolution suspends shares in light of Axa deal

Clive Cowdery’s investment acquisition vehicle Resolution (LON:RSL) has announced this morning that it has suspended its shares while the group attempts to complete the buy-out of Axa’s UK life assurance arm.

Kate Neilson
shareprices.com - Monday, June 14, 2010

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Resolution is on the verge of buying Axa's UK life assurance business

According to reports, the deal to buy the French insurer's life assurance business could be completed by the end of the month and will cost Resolution £2.75bn. Resolution said in a statement released today that it would fund the deal by a £2bn pre-emptive rights issue, a large bank facility and issuing £500m of bonds to Axa. And if the deal is completed, the US-based group intends to merge the newly-acquired business with Friends Provident, the life and pensions company it bought for £1.9bn in August 2009.

Both parties involved have released statements on the deal. John Tinner, Resolution’s CEO, said: “This acquisition would bring strong momentum in Resolution’s life assurance consolidation project, and provides a range of options for further activity”.

While a statement released by Axa said, “This potential transaction does not call into question in any way the Aca Group’s continuing long-term commitment to the UK market”.

For Axa, the sale would boost the group’s capital strength and leave it with net cash proceeds of €1.7bn.

While Resolution’s shares are stalled, the FTSE 250 index is gaining as whole by more than one per cent.

The group heading the risers in this session is Weir (LON:WEIR), the industrial engineer and pump-maker. Its share price has gained 111p, pushing the group 12 per cent up. The reason for the jump is fresh reports this morning that orders have increased for the group in the past three months and it is set to buy Linatex – a Malaysian firm that makes wear-resistant rubber products for the mining industry. Weir, which operates from Glasgow, would assume £19m of debt if the deal goes through but said it would start paying for itself by next year.

 

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