£500million bonus for Aviva after selling US offshoot
SHARES in Aviva jumped yesterday after it reached a milestone in its turnaround plan by selling its US offshoot for nearly £500million more than expected.
The insurance company agreed in December to sell the business for £1.1billion but thanks to rising stock markets the final price paid was £1.6billion.
The shares rose 5½p to 413p.
Under the deal struck with buyer Athene Holding, part of private equity firm Apollo Global Management, the price was based on a multiple of estimated earnings which benefited from rising global share prices.
Although the two parties agreed terms nine months ago completion was held up while regulators scrutinised its effect on competition.
Chief executive Mark Wilson, who joined from AIA in January, said: “The sale of the US business is another milestone for Aviva – it simplifies the business, strengthens the capital position and is a step towards our goal of creating a business focused on cash flow and growth.”
It is the last major sell-off by the former Norwich Union, under a streamlining process started last year by chairman John McFarlane, since when it has sold about 16 foreign businesses.