The Boards of Just Retirement Group (Just Retirement) and Partnership Assurance Group have reached agreement on the terms of a recommended all-share merger to create JRP Group.
The Merger is to be effected by means of a court-sanctioned scheme of arrangement of Partnership Assurance under Part 26 of the Companies Act (the Scheme).
The Merger is expected to result in Just Retirement Shareholders owning approximately 60 per cent. of the Combined Group and Partnership Assurance Shareholders owning approximately 40 per cent. of the Combined Group.
Under the terms of the Merger, Partnership Assurance Shareholders will be entitled to receive:
for each Partnership Assurance Share held 0.834 New Just Retirement Shares.
Based on the Closing Price of Just Retirement Shares of 199 pence on the Last Practicable Date, the Merger represents an indicative value of 166 pence per Partnership Assurance Share and values the entire issued and to be issued ordinary share capital of Partnership Assurance at approximately GBP668.5 million.
he Boards of Just Retirement and Partnership Assurance have agreed a unified management team of the Combined Group under the leadership of Rodney Cook as Group Chief Executive Officer. Reporting to Rodney Cook will be David Richardson as Deputy Group Chief Executive Officer and Simon Thomas as Group Finance Director. Chris Gibson-Smith will be the Chairman of the Combined Group while Tom Cross Brown will assume the role of Deputy Chairman.
Avallux, a company wholly owned by Permira IV Fund, which holds approximately 52.3 per cent. of Just Retirement Shares, and the Cinven Funds, which are managed by Cinven and which together hold approximately 51.9 per cent. of Partnership Assurance Shares (in each case as at the Last Practicable Date), are both fully supportive of the Merger and have provided irrevocable undertakings to vote in favour of the Merger at the Just Retirement General Meeting and the Partnership Assurance General Meeting, respectively, and, in the case of the Cinven Funds, the Court Meeting.
Just Retirement and Partnership Assurance intend to raise equity capital amounting, in aggregate, to approximately GBP150 million. Further details on the exact quantum and structure of the Capital Raise will be provided at the time of the Capital Raise.
Tom McPhail (pictured), Head of Pensions Research at Hargreaves Lansdown, says: “The retirement income market has changed fundamentally since the Budget of 2014. The majority of smaller pension pots are simply being cashed in, drawdown demand has increased significantly and at the same time, the proportion of customers shopping around the market for the best annuity deals still isn’t increasing. Given these factors and the similarity of their business models and strategies, it is hardly surprising to see these two companies merging.”
“This should not be seen as evidence of the death of annuities though. Investors still show a strong appetite for a secure retirement income for at least some of their pension pot and for those that do shop around on the open market, enhanced annuities now make up over 75% of all transactions*.”
“Just Retirement has the larger market share and its share price has proved more resilient since the Budget bombshell, though Partnership’s share of business has been increasing in recent months*. The two companies’ combined share currently makes up over 40% of the open market annuity business*. As highlighted in their announcement this morning, there is still considerable potential for enhanced annuity providers to add value to Defined Benefit scheme derisking strategies.”
“For existing annuity investors, this deal is likely to help dispel any concerns or uncertainty they may have had over the future of their annuity provider and the security of their retirement income.”