The rumoured takeover of Friends Life by Aviva looks likely to go ahead in a deal reportedly worth about £5bn.

A statement has been released by Aviva in relation to speculation that an agreement had been reached, with talks over a share combination deal disclosed.
The Board of Friends Life has indicated to Aviva that it is willing to recommend the key financial terms of the Possible Offer to Friends Life shareholders, subject to other terms being met.
The statement read: "The Board of Aviva believes that the combination would create the leading insurance and savings business in the UK with 16 million customers, who stand to benefit from being part of a stronger and more diversified group with a wider product range.

{desktop}{/desktop}{mobile}{/mobile}

"The Board of Aviva believes that the combination with Friends Life would deliver significantly higher cash flows enhanced by substantial synergies, principally through operating efficiencies in the combined back books and the removal of overlapping overheads.

"In line with Aviva's true customer composite strategy, Friends Life's 5 million customers will benefit from Aviva's product offer in general insurance, health, and asset management as well as life insurance.
"The transaction is also expected to lead to a substantial increase in profits and assets under management at Aviva Investors through the addition, over time, of Friends Life's UK assets under management which are currently principally outsourced, materially increasing Aviva Investors' total assets under management.
"The combined business would have leadership positions across key product areas and be better positioned to take advantage of the evolving UK life insurance market with greater capacity to invest and innovate.
"Specifically the transaction would lead to a substantial increase in Aviva's protection value of new business, more than double Aviva's corporate pension assets under administration and create new opportunities by serving Friends Life's £2 billion of annual pension vestings."
However, the company stressed that the deal is not completed, saying: "There can be no certainty that Aviva will proceed to make an offer for Friends Life. A further announcement will be made in due course."
Any transaction would be subject to regulatory approval.

Get FREE daily news summaries direct to your inbox. Sign up on the homepage now.

Follow us on Twitter and get frequent news alerts @FPM_online.

Or follow Editor Kevin O'Donnell - @FPM_Kevin or staff writer James Nadal - @FPM_James.

For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.