August 11, 2015 / 7:52 AM / 4 years ago

UPDATE 1-UK's Just Retirement to buy rival in $1 bln deal

* All-share deal values Partnership at 668.5 mln stg

* Just Retirement investors to have 60 pct of combined firm

* Just Retirement shares up 1.2 pct, Partnership up 9 pct (Adds deal detail, CEO quote, share reaction)

By Simon Jessop

LONDON, Aug 11 (Reuters) - Britain’s Just Retirement has agreed to buy rival Partnership Assurance for 669 million pounds ($1 billion) in shares, hoping greater scale and a stronger capital position will help it cope with changes that have rocked its industry.

Pensions and savings firms have been hit hard by reforms that have removed the obligation for retirees to buy an annuity — a financial product providing income for life that has been a high-margin cornerstone of many companies’ businesses.

Under the terms of the deal, Just Retirement shareholders will own about 60 percent of the enlarged group, while Partnership shareholders will get 40 percent after receiving 0.834 shares in the new company for each Partnership share held.

The new company — JRP Group - will have better resources to develop new products and shore up its core UK market before looking to expand overseas, into South Africa and the United States, Just Retirement Chief Executive Rodney Cook said on Tuesday on a conference call with journalists.

Cook said both firms had enjoyed a strong start to the year for new business, which would leave the market “pleasantly surprised”. Partnership issued interim results showing 231 million pounds in premiums from new business.

The deal is based on a Just Retirement share price of 199 pence and a Partnership price of 166 pence and will see the new company look to raise around 150 million pounds in fresh equity, the companies said.

The boards of both have agreed to share responsibility for the running of the new firm and have the support of their private equity backers for a deal, which should provide pretax cost savings of at least 40 million pounds a year.

Shares in both firms rose in early dealing, with Just Retirement up 1.3 percent and Partnership up 9 percent, against a FTSE All-Shares index down 0.3 percent.

$1 = 0.6423 pounds Reporting by Simon Jessop and Sinead Cruise; Editing by Matt Scuffham and Mark Potter

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