Standard Life Aberdeen plc (SLA) has announced an update regarding the proposed sale of its UK and European insurance business (Standard Life Assurance) to Phoenix Group, ahead of its annual general meeting taking place today.
SLA said in a statement that it has a proposed return of capital: of up to £1.75bn to SLA shareholders, with £1bn to be returned to shareholders by way of a B share scheme (a minimum of 33.4p per share based on current expectations) and the remaining up to £750m to be returned by way of a share buyback programme.
A shareholder circular in respect of the proposed transaction expected to be published tomorrow, 30 May 2018, with a general meeting for SLA shareholders to approve the proposed transaction and the proposed return of capital expected to be held on 25 June 2018
‘Revised operating model’
Full details of the proposed transaction – expected to complete in the third quarter of 2018 – and the proposed return of capital will be set out in the shareholder circular which is expected to be published tomorrow and sent to SLA shareholders shortly thereafter, with the general meeting of the company to approve the proposed transaction and proposed return of capital expected to take place on 25 June 2018.
SLA added that the circular will include “important information” and details in relation to SLA’s strategy and plans, including the implementation of a revised operating model which is expected to enhance the commercial and operational delivery of its strategy.
Commenting ahead of the company’s annual general meeting, Sir Gerry Grimstone, chairman of SLA, said:
“The last year has been a period of significant change for Standard Life Aberdeen with the proposed sale of the UK and European insurance businesses completing our transformation to a capital light investment company.
“We are continuing to focus on harnessing the breadth and depth in our investment capabilities to deliver cost effective solutions to meet the needs of our clients and customers across multiple channels and geographies.
“The cash generated from the sale will enable us to continue to invest in the development of our business and also to return surplus capital to shareholders. Our proposal to return up to £1.75bn by way of a B share scheme and share buybacks represents over 15% of our market capitalisation at close of business on 25 May 2018, and would extend our long-running track record of returning surplus cash to shareholders.”
Proposed return of capital
The SLA Board said that it expects that the company will be supervised at the group level on a CRD IV basis following completion of the proposed transaction, subject to receiving regulatory approval. As announced on 3 May 2018, SLA continues to engage with its UK regulators in respect of their assessment of the proposed transaction and its impact on the group.
The SLA Board expects that there will be surplus capital within the group as a result of the receipt of proceeds from the proposed transaction and anticipated lower capital requirements. SLA has therefore considered the potential for a substantial return of capital to shareholders following completion.
“We are today announcing that SLA proposes to return up to £1.75 billion to shareholders following completion, subject to shareholder and regulatory approvals,” the statement read.