Standard Life has agreed a deal to acquire Aegon UK for £2bn to create the UK’s largest retirements savings and income business.

The enlarged group will have 16 million customers and assets under administration (AUA) totalling an estimated £480bn.

Standard Life said it would fund the transaction through a combination of debt, cash and the issue of new ordinary shares – which will represent approximately 15.3% of the group’s enlarged share capital – to Aegon on completion, with Standard Life welcoming Aegon as a new strategic shareholder and asset management partner.

The move will establish Standard Life as the UK’s second largest workplace pensions platform by assets, adding £74bn in AUA and 2.1 million customers to an existing £71bn workplace offering. The deal will also transform Standard Life from a smaller retail provider to the UK’s second largest retail pensions and savings platform by assets – adding £86bn in AUA and a further 1.8 million customers.

Combined, the £160bn in AUA added to the enlarged group will make Standard Life the UK’s largest retirement savings and income business, which the company said would unlock “significant long term shareholder value” through recurring and non recurring synergies.

“Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business,” group CEO of Standard Life, Andy Briggs, commented.

“We will be in an even stronger position to meet the evolving needs of our 16 million customers with enhanced digital, advice and distribution capabilities across workplace and retail, strengthening our standing in one of the world’s most attractive markets.

“Furthermore, the transaction accelerates our shift to capital-light whilst strengthening our cash, capital and earnings position to create increased value for shareholders.”

Aegon CEO, Lard Friese, added that Standard Life was the “right owner” for Aegon UK.

“We share the same values and a strong commitment to customers, and together the businesses will create the UK’s largest retirement savings and income provider,” Friese said.

“The businesses are complementary and the combination offers an excellent outcome for Aegon UK’s customers and colleagues. Aegon’s shareholding will provide an opportunity to participate in the future success of the enlarged group.”

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