Two large insurance groups - with business covering wealth management, including the Asia region - have agreed to merge.

Aviva and Friends Life, today have agreed for the former firm to buy Friends Life in an all-share deal valued at £5.6 billion ($8.79 billion), making it one of the largest insurance marriages in recent UK history. Friends Provident International, part of Friends Life, offers wealth management services and has a significant business stream in part of Asia.

Under the terms of the proposed acquisition, holders of Friends Life shares will receive 0.74 new Aviva shares for each Friends Life Share they hold. The £5.6 billion value of the deal represents a premium of 15 per cent to the closing price of 343 pence per Friends Life share on 20 November, a statement from the firms said.

The proposed agreement means Friends Life shareholders would own around 26 per cent of the issued ordinary share capital of the expanded Aviva Group.

“The proposed acquisition accelerates Aviva's investment thesis of `cash flow-plus growth’ with a financial and strategic rationale that the board of Aviva believes creates a compelling opportunity for the enlarged Aviva Group to create value for both sets of shareholders,” the statement said.

Among benefits of the acquisition, the statement said, is that it would generate about £225 million of run-rate annual cost synergies by the end of 2017 which Aviva says are worth around £1.8 billion. Aviva said it will have a business with 16 million clients in the UK.

Such a deal would also allow Aviva Investors, part of the Aviva Group, to add up to approximately £70 billion of Friends Life's UK assets under administration, increasing its AuM by up to 29 per cent., to up to approximately £309 billion.

If the deal goes through, it is expected that Andy Briggs, group CEO of Friends Life, will become CEO of Aviva UK Life and join the board of Aviva as an executive director. Sir Malcolm Williamson, chairman of Friends Life, will join the board of Aviva as senior independent director and it is anticipated that a further non-executive director of Friends Life will join the board of Aviva.

As mentioned above, both firms have wealth management operations. Friends Provident International, part of Friends Life, earns a significant portion of income in Asia. Friends Life sold its Lombard International Assurance business, which provided wealth management solutions, to US-listed Blackstone earlier this year.