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London - British insurer Aviva has agreed terms for a £5.6bn takeover of rival Friends Life in an all share deal which creates a market leader with 16 million life insurance customers.
Analysts said the cost savings from the combination were higher than expected but would take several years to be achieved.
Aviva said the merged company was expected to generate £600m in excess cash flow a year and about £225m in annual cost savings by the end of 2017.
Andy Briggs, current group chief executive of Friends Life, will become CEO of Aviva UK Life, with Mark Wilson continuing as CEO of the enlarged Aviva Group.
Planned merger
Wilson said there could likely be job losses but would not give an estimate.
The merger has the backing of Clive Cowdery, who founded Friends Life in 2008 when it was known as Resolution.
Holders of Friends Life shares will receive 0.74 new Aviva shares, valuing the company at £5.6bn, unchanged from their announcement of a planned merger.
Friends Life shareholders will also receive a second interim dividend of 24.1 pence per share. Aviva said it proposed to pay a final dividend of 12.25 pence for 2014, up 30% on last year.
