Blackstone acquires Lombard for €399m

An upfront cash consideration of €320m and a €9m interest equivalent in cash will be paid to owner Friends Life upon completion of the deal, while €70m will be a deferred payment in the form of a vendor loan note.

An additional €50m could be paid as part of the vendor loan note based on certain criteria relating to Lombard's future assets under administration: the vendor loan note could increase to a maximum of €120m if lapse rates for the period to 30 June 2017 are in line with, or better than, Friends Life's current assumptions. The value of the vendor loan note could, however, decrease to €20m if the investment returns are significantly worse than current long-term assumptions for the period to 30 June 2019.

Lombard also intends to return €329m to shareholders via a share buy-back programme.

Friends Life stated that, although Lombard formed part of the group's initial purchase of Friends Provident in 2009, the company had always had a different profile to the rest of the group. The divestment is in line with its strategy to maximise value from all aspects of the group and enables Friends Life to deliver on its commitment to return cash to shareholders. The group also stated that the disposal of Lombard moves the group further towards being a streamlined insurance company.

Blackstone said it was interested in Lombard because of its dedication to distribution partners, as well as its strong management and employee team.

Company
Headquartered in Luxembourg and with offices in Switzerland and Italy, Lombard is a pan-European specialist in estate and succession planning solutions for high-net-worth individuals using life assurance. It works with an established network of private banks and independent financial advisers across Europe and selected markets in Latin America and Asia.

Lombard offers solutions based on single-premium, whole-of-life and unit-linked life assurance structures with limited levels of re-insured life cover. It posted an operating loss of £46m in 2013 and has €24bn in total assets under management.

People
Andy Briggs is group CEO of Friends Life. Menes Chee is a managing director at Blackstone. Norbert Becker is non-executive chairman of Lombard, while Claude Marx is CEO.

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• Topics
• Benelux
• Buyouts
• Financials
• Blackstone Group
• Luxembourg