Axa UK and Resolution in talks over £2.75bn deal

Axa's UK businesses would be merged with Friends Provident

The owner of Friends Provident, Resolution, has confirmed it is in talks about a possible bid for Axa's UK life assurance businesses.

Resolution said it would pay £2.75bn, funded by a £2bn rights issue.

If the deal goes ahead, the Axa businesses would be merged with Friends Provident, creating the opportunity for "significant" savings.

At its request, trading in Resolution shares on the London Stock Exchange has been suspended.

Resolution, which wants to become the UK's biggest provider of life insurance, said it hoped to be able to announce an agreed deal this month.

However, it added there was no certainty that the talks would lead to a deal.

Axa, the French insurance group, said the potential deal "did not call into question...[its] continuing long-term committment to the UK market".

If the sale went ahead, Axa would keep its other UK businesses - Wealth Management and Direct Protection.

The Unite union said it had started a consultation with Axa about the impact of any deal.

"Our concern at this time centres on the implications of the possible sale of this business for the job security, terms and conditions and pensions of the Axa workforce," said Unite national officer Siobhan Endean.

In its statement, Resolution said the deal would lead to cost savings, particularly in the areas of sales and marketing and support costs.