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Aviva merger with Friends Life approved

Aviva merger with Friends Life approved

Aviva shareholders have voted in favour of the £5.6bn acquisition of Friends Life.

The shareholders met in central London on 26 March, when more than 99 per cent of them voted in favour of the merger. Shareholders in Friends Life also approved the merger, which will become effective from 13 April.

The Guernsey court will now have to sanction the proposals, but Aviva has already announced changes in its senior management.

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David Barral, chief executive of Aviva UK and Ireland Life, will leave the company at the end of May after 16 years, to be replaced by Friends Life chief executive Andy Briggs.

Meanwhile John Lister will move from his role as group risk officer to become chief financial officer of Aviva UK and Ireland Life, and group business development officer.

The merger will allow the insurance company to make £225m in cuts by the end of 2017, and loss of 1,500 jobs.

However there is uncertainty surrounding the future of Sesame, which is owned by Friends Life.

In a prospectus issued to shareholders earlier this year, Aviva said: “Sesame, a subsidiary of Sesame Bankhall Group Limited, made losses of approximately £19m for the financial year ended 31 December 2013 and Aviva understands that it is, in its current form, expected to continue to make losses in the future.

“Sesame is, therefore, reliant on the continued financial support of its ultimate parent, Friends Life, to be able to continue to trade.”

Analyst view

Matt Preston, an analyst with Berenberg, said: “I don’t think it was ever in doubt that shareholders would approve this. It makes a huge amount of sense from a balance sheet point of view.

“It will be a challenge to integrate these two businesses so I am probably less positive than some were. It will be a hard slog.”