Standard Life Aberdeen plc said on Thursday it is “considering the potential for a substantial return of capital to shareholders” after it completes a deal to sell the bulk of its insurance business to Phoenix Group.
In February, Standard Life Aberdeen confirmed the sale of its “capital-intensive” insurance business to Phoenix Group for a total consideration of £3.24 billion including £2.28 billion in cash and a 19.99% shareholding in Phoenix Group.
Analysts at Bernstein told Reuters they expected Standard Life Aberdeen to have £1.2 billion-£1.3 billion in capital available for share buy-backs and “bolt-on” acquisitions after the deal, in addition to using £800 million for debt reduction.
Bernstein reiterated their “outperform” rating on the stock.
On Thursday, Standard Life Aberdeen said in a stock exchange statement: “Standard Life Aberdeen plc and Phoenix Group Holdings are providing an update regarding the proposed sale of Standard Life Aberdeen’s UK and European insurance business (Standard Life Assurance) to Phoenix.
“As previously announced, the proposed transaction is expected to complete in the third quarter of 2018.
“Phoenix and Standard Life Aberdeen are actively progressing with the separation and integration planning for the proposed transaction.
“As part of this process, Standard Life Aberdeen continues to engage with its UK regulators in relation to the future prudential supervision of the group.
“Standard Life Aberdeen is also considering the potential for a substantial return of capital to shareholders following completion.
“Phoenix has made good progress with the financing for the proposed transaction, having issued its inaugural Restricted Tier I bond on 26 April 2018, and continues to engage with its regulators.
“It is expected that the general meetings for each of Standard Life Aberdeen and Phoenix shareholders to approve the transaction will be held contemporaneously.
“It is expected that the parties’ respective circulars and the Phoenixprospectus will be published shortly after 29 May 2018, which is the date of Standard Life Aberdeen’s annual general meeting.
“The general meetings of Standard Life Aberdeen and Phoenix to approve the proposed transaction will take place as soon as practicable thereafter, in line with conventional notice periods.”