Friends Life suspends buyback after Aviva takeover offer

Friends Life has suspended its share buyback after the insurer on Friday agreed to a £5.6bn takeover by larger rival Aviva.

The £317m stock repurchase programme, which only started on 31 October after the completion of Friends Life's disposal of Lombard, has already resulted in over 9m shares being bought back for £29.9m.

As of Monday, 6.1m shares have been cancelled and the remaining 2.9m will be cancelled in due course.

"Should a combination with Aviva not be forthcoming, Friends Life would look to reinstate the buyback programme at the earliest available opportunity," the company said.

The 398.9p-a-share offer for Friends Life, which came out after markets closed on Friday, values the group at a 15% premium to its closing price that day.

The companies said in a statement that the deal would create the UK's "leading insurance, savings and asset management business by number of customers, with a stronger balance sheet and significantly higher cash flows, enhanced by substantial synergies, from which to accelerate dividend growth".

The Aviva-Friends Life merger is set to be the biggest deal in the UK insurance industry since the CGU-Norwich Union tie-up nearly 15 years ago, through which Aviva was formed.