Media centre

All Group media enquiries should be directed to
Vanessa Maydon, Corporate Affairs Director.

Cinven Partners LLP
Warwick Court
Paternoster Square
London EC4M 7AG

Tel: +44 (0)20 7661 3325
Mob: +44 (0)7802 961 902
Email: Vanessa Maydon

Press releases

Just Group plc
11 August 2015

RECOMMENDED ALL-SHARE MERGER of Just Retirement group plc and Partnership Assurance group plc to create JRP GROUP PLC

Summary

  • The Boards of Just Retirement Group plc ("Just Retirement") and Partnership Assurance Group plc ("Partnership Assurance") are pleased to announce that they have reached agreement on the terms of a recommended all-share merger to create JRP Group plc (the "Merger"). 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 40percent. of the Combined Group (disregarding the impact of any Capital Raise, as described below).
  • 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 £668.5 million.
  • The 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 S.à r.l. (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 £150 million. Further details on the exact quantum and structure of the Capital Raise will be provided at the time of the Capital Raise.

Reasons for the Merger

The Boards of Just Retirement and Partnership Assurance believe that the Merger will deliver significant strategic and financial benefits for the Combined Group:

Strategic benefits

  • Scale to grow in attractive segments. The Combined Group's larger capital base will enable a broader defined benefit proposition and enhance the Combined Group's perceived strength of covenant, opening up opportunities in the attractive defined benefit scheme de-risking segment.
  • Consumer champion. The Merger will strengthen the competitive position of the Combined Group in the UK retirement income market, expected to lead to improved customer outcomes compared to the products currently offered by larger incumbent insurers.
  • Accelerate new product launches. Combining the specialist management teams and expertise of Just Retirement and Partnership Assurance will also enhance the Combined Group's ability to develop and accelerate new product launches in the evolving retirement income market. This is of critical importance given the greater expectation of new products among customers following the freedom and choice introduced by the 2014 pension reforms.
  • Outstanding intellectual property. The combination of Just Retirement and Partnership Assurance's mortality datasets and underwriting expertise will facilitate improved risk selection and greater reserving accuracy, leading to better value solutions for customers across the entire product range.
  • More efficient distribution. In both the UK defined benefit de-risking segment and retirement income market, the streamlining of sales functions will lead to a more efficient distribution model for the Combined Group. Overseas expansion will be facilitated through combined international expertise.

Financial benefits

  • Synergy potential. The combination of the two businesses is expected to create the potential for significant synergies supporting meaningful EPS accretion for Just Retirement Shareholders and Partnership Assurance Shareholders on a fully phased basis.[1] The Just Retirement Board expects the Merger to result in pre-tax cost savings of at least £40 million per annum. These synergies are expected to be implemented following completion of the Merger with the full run-rate being achieved in 2018 (the third year following completion) and are expected to require one-off integration costs of £60 million over two years. The Just Retirement Directors also expect these synergies to have a positive impact on embedded value, new business margin, economic capital and Solvency II capital ratios over time. 
  • High quality cash generation. The Combined Group will have stronger combined capacity for cash generation, supported by Partnership Assurance's more developed back book and improved operational efficiencies delivered from the combined operating platform, supporting growth and dividend capacity.

  • Enhanced capital position. The Combined Group's stronger capital position will be enhanced through the intended equity Capital Raise of approximately £150 million, providing the financial flexibility to pursue future growth initiatives and product development.

Strategy of the Combined Group

The Combined Group intends to use its outstanding combined intellectual property and greater scale to accelerate the existing strategies of Just Retirement and Partnership Assurance, allowing the business to sustain its position in the rapidly developing retirement income market, generating improved outcomes for customers and strong returns for investors:

  • The Combined Group will seek to build upon the considerable progress made by Just Retirement and Partnership Assurance since 2013 in the defined benefit de-risking segment, capitalising on its enhanced size and financial strength to compete successfully for larger opportunities using an individually underwritten approach based on medical and/or lifestyle factors, as well as existing segments.
  • In the UK retirement income market, the Combined Group will seek to utilise its improved scale, efficiency and capital strength to continue providing customers with better value alternatives to products offered by larger incumbent insurers.
  • The Combined Group will look to strengthen its position in the broader retirement income space fundamentally affected by regulatory change, acting as a disruptor to the larger incumbent insurers whilst continually innovating and developing new products.
  • Finally the Combined Group will build upon the foundations laid by both companies to offer their attractive products in new geographies.

Capital Raise.

  • Just Retirement and Partnership Assurance intend to raise equity capital amounting, in aggregate, to approximately £150 million. Further details on the exact quantum and structure of the Capital Raise will be provided at the time of the Capital Raise. This equity will allow the Combined Group to cover expected non-recurring integration and transaction costs, provide further comfort over the transition to Solvency II, and support future growth initiatives and product development.
  • In line with Just Retirement's previously stated strategy, the Combined Group will explore, on an on-going basis, a range of balance sheet options (including accessing the debt capital markets) with a view to providing further financial strength and supporting future growth.
  • Whilst the formal change in control applications will be made to the PRA and FCA in due course, pre-notification discussions have taken place with both the PRA and FCA with respect to the Merger and the capital position of the Combined Group.

Recommendations

  • The Partnership Assurance Board, which has been so advised by Evercore as to the financial terms of the Merger, considers the terms of the Merger to be fair and reasonable. In providing advice to the Partnership Assurance Board, Evercore has taken into account the commercial assessments of the Partnership Assurance Directors.
  • Accordingly, the Partnership Assurance Board unanimously intends to recommend that Partnership Assurance Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Merger to be proposed at the Partnership Assurance General Meeting, as all Partnership Assurance Directors who hold Partnership Assurance Shares have irrevocably undertaken to do so in respect of their (and their connected persons') aggregate beneficial holdings of 16,860,524 Partnership Assurance Shares, representing approximately 4.2 per cent. of the issued ordinary share capital of Partnership Assurance on the Last Practicable Date.[2]Further details of these irrevocable undertakings are set out in Appendix IV to this announcement.
  • The Merger constitutes a class 1 transaction for Just Retirement for the purposes of the Listing Rules. Accordingly, the Merger will be conditional on the approval of the Just Retirement Shareholders for the Merger and the issuance of the New Just Retirement Shares at the Just Retirement General Meeting.
  • The Just Retirement Board considers the Merger to be in the best interests of Just Retirement and the Just Retirement Shareholders as a whole and unanimously intends to recommend that Just Retirement Shareholders vote in favour of the Just Retirement Resolutions to be proposed at the Just Retirement General Meeting, as all Just Retirement Directors who hold Just Retirement Shares have irrevocably undertaken to do so in respect of their own aggregate beneficial holdings of 5,639,891 Just Retirement Shares, representing approximately 1.1 per cent. of the issued ordinary share capital of Just Retirement on the Last Practicable Date.
  • The Just Retirement Board has received financial advice from Barclays and Fenchurch in relation to the Merger. In providing their advice to the Just Retirement Board, Barclays and Fenchurch have relied upon the Just Retirement Directors' commercial assessments of the Merger.

Irrevocable undertakings

  • In addition to the irrevocable undertakings given by the Partnership Assurance Directors described above, the Cinven Funds have irrevocably undertaken to vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Merger to be proposed at the Partnership Assurance General Meeting in respect of their entire beneficial holding of 207,593,567 Partnership Assurance Shares, representing approximately 51.9 per cent. of the issued ordinary share capital of Partnership Assurance on the Last Practicable Date.
  • As such, Just Retirement and Partnership Assurance have received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Merger to be proposed at the Partnership Assurance General Meeting in respect of 224,454,091 Partnership Assurance Shares in aggregate, representing approximately 56.1 per cent. of the issued ordinary share capital of Partnership Assurance on the Last Practicable Date.
  • In addition to the irrevocable undertakings given by the Just Retirement Directors described above, Avallux has irrevocably undertaken to vote in favour of the Just Retirement Resolutions to be proposed at the Just Retirement General Meeting in respect of its entire beneficial holding of 261,788,257 Just Retirement Shares, representing approximately 52.3 per cent. of the issued ordinary share capital of Just Retirement on the Last Practicable Date.
  • As such, Just Retirement and Partnership Assurance have received irrevocable undertakings to vote in favour of the Just Retirement Resolutions to be proposed at the Just Retirement General Meeting in respect of 267,428,148 Just Retirement Shares in aggregate, representing approximately 53.4 per cent. of the issued ordinary share capital of Just Retirement on the Last Practicable Date.

Commenting on the Merger, Chris Gibson-Smith, Chairman of Partnership Assurance, said:"I am delighted to announce the recommended all-share merger of Just Retirement and Partnership Assurance. Both businesses have at their core a focus on using outstanding intellectual property and underwriting expertise to deliver better value products and improved customer outcomes within defined benefit, UK retail retirement income and international markets."

Commenting on the Merger, Tom Cross Brown, Chairman of Just Retirement, said: "This transaction represents a unique opportunity to accelerate the existing strategy of both businesses. Our two businesses will be bigger, stronger and more efficient together, which we believe will allow us to deliver better returns to both policyholders and shareholders."

CMA Pre-Condition and Conditions to the Merger

 

  • The Merger is subject to the satisfaction or waiver of the CMA Pre-Condition set out in Appendix I, the Conditionsand the further terms set out in Appendix II to this announcement and to the full terms and conditions which will be set out in the Scheme Document, which include, inter alia (i) the Scheme becoming effective no later than the Long Stop Date; (ii)approval by the requisite majority of Just Retirement Shareholders at the Just Retirement General Meeting and (iii)regulatory clearances being received from the PRA, the FCA and (to the extent the CMA Pre-Condition is waived) the CMA, all as further described in Appendix II to this announcement.
  • Inorder tobecome Effective,the Scheme mustbe approved by amajorityinnumber representingnotlessthan75 percent.invalueofPartnership AssuranceShareholders present andvotingeither inpersonor by proxyat theCourt Meeting.

Next steps

  • It is expected that the Scheme Document will be despatched to Partnership Assurance Shareholders in October 2015 provided the CMA Pre-Condition has been satisfied by that time (and the Scheme Document will be despatched in any event by 1 February 2016, unless Just Retirement and Partnership Assurance together agree a later date). The Scheme Document will include full details of the Scheme and contain notices of the Court Meeting and the Partnership Assurance General Meeting and the expected timetable.
  • It is expected that the Prospectus, containing information about New Just Retirement Shares and the Combined Group, will be published by Just Retirement at the same time as the Scheme Document is posted to Partnership Assurance Shareholders. The Just Retirement Shareholder Circular, containing details of the Merger and notice for the Just Retirement General Meeting, will also be posted to Just Retirement Shareholders at the same time as the Scheme Document is posted to Partnership Assurance Shareholders, with the Just Retirement General Meeting being held at or around the same time as the Partnership Assurance Meetings.
  • The Scheme is expected to become Effective in December 2015, subject to the satisfaction or waiver of the CMA Pre-Condition set out in Appendix I to this announcement and the Conditions and certain further terms set out in AppendixII to this announcement.

This summary should be read in conjunction with the full text of the following announcement, including the Appendices. The CMA Pre-Condition is set out in Appendix I.  The Conditions and certain further terms of the Merger are set out in Appendix II. Appendix III contains bases and sources of certain information contained within this announcement. Appendix IV contains details of irrevocable undertakings given to Just Retirement and Partnership Assurance. Appendix V contains information relating to the Quantified Financial Benefits Statement made in this announcement and the reports of Just Retirement's reporting accountants and financial advisers. Appendix VI contains the definitions of certain terms used in this announcement.

For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement contained in this announcement is the responsibility of Just Retirement and the Just Retirement Directors. Any statement of intention, belief or expectation for the Combined Group following the Effective Date is an intention, belief or expectation of the Just Retirement Directors and not of the Partnership Assurance Directors.

Barclays is lead financial adviser and, for the purposes of the Merger, corporate broker to Just Retirement and Fenchurch is financial adviser to Just Retirement. Clifford Chance LLP is acting as legal adviser to Just Retirement. KPMG is acting as reporting accountants to Just Retirement. Deutsche Bank and Nomura are acting as corporate brokers to Just Retirement.

Evercore is lead financial adviser to Partnership Assurance. J.P. Morgan Cazenove is financial adviser and corporate broker to Partnership Assurance and Morgan Stanley is financial adviser and corporate broker to Partnership Assurance. Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Partnership Assurance.

Analyst and investor presentation

Just Retirement and Partnership Assurance will host a joint presentation to discuss the Merger today at 8.00 a.m. in the Auditorium at Deutsche Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB.

To access the presentation by telephone please use:

United Kingdom (Local): 020 3059 8125

All other locations: +44 20 3059 8125

Conference password: JRP

A copy of this announcement, the presentation slides, a transcript of the conference call and an audio recording will be available afterwards on Just Retirement's website at www.justretirementgroup.com and Partnership Assurance's website at www.partnership-group.co.uk.

Enquiries

Just Retirement (Investors)


 

 

 

 

 

Portfolio company videos

 Clinical Trials

Bioclinica

Clinical Trials

 Travel services provider

Hotelbeds Group

Travel services provider

 Truck component manufacturer

Jost

Truck component manufacturer

 Footwear and accessories retailer

Kurt Geiger

Footwear and accessories retailer

 Contract research organisation

Medpace

Contract research organisation

 Electronic security and alarm systems

Pronet

Electronic security and alarm systems

 Property valuation and advisory services

Tinsa

Property valuation and advisory services

 Ufinet is a neutral telecom operator.

Ufinet

Ufinet is a neutral telecom operator.

 Business services software

Visma

Business services software

Media contacts

Cinven

Vanessa Maydon
Corporate Affairs Director
Tel : +44 (0)20 7661 3325
Mob : +44 (0)7802 961 902
Email : Vanessa Maydon

Clare Bradshaw
Communications Manager
Tel : +44 (0)20 7667 3248
Mob : +44 (0)7881 918 967
Email : Clare Bradshaw

UK - FTI Consulting

Edward Bridges
Tel : +44 (0)20 7269 7147
Mob : +44 (0)7768 216 607
Email : Edward Bridges

Stephanie Ellis
Tel : +44 (0)20 3727 1173
Mob : +44 (0)7890 543 056
Email : Stephanie Ellis

France – FTI Consulting

Guillaume Granier
Tel : +33 (0)1 47 03 68 61
Mob : +33 (0)6 32 65 79 28
Email : Guillaume Granier

Caroline Guilhaume
Tel : +33 (0)1 47 03 68 17
Mob : +33 (0)6 38 91 88 51
Email : Caroline Guilhaume

Germany - FTI Consulting

Lutz Golsch
Tel : +49 (0)69 920 37 110
Mob : +49 (0)173 651 7710
Email : Lutz Golsch

Daniel Herbert
Tel : +49 (0)69 920 37 183
Mob : +49 (0)151 122 63834
Email : Daniel Herbert

US - Joele Frank

Jonathan Keehner
Tel : +1 212.355.4449
Mob : +1 917 589 2073
Email : Jonathan Keehner

Julie Oakes
Tel : +1 212.355.4449
Mob : +1 917 574 7263
Email : Julie Oakes

Spain – Groupo Albion

Alejandra Moore Mayorga
Tel : +34 91 531 23 88
Email : Alejandra Moore Mayorga

Sofia Garcia
Tel : +34 91 531 23 88

Italy – Community Group

Roberto Patriarca
Tel : +39 02 89 40 42 31
Mob : +39 335 65 09 568
Email : Roberto Patriarca

Marco Pedrazzini
Tel : +39 02 89 83 66 21
Mob : +39 347 0369 222
Email : Marco Pedrazzini