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Aviva investor cuts stake 70 percent after Friends takeover

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(Bloomberg) — The Capital Group Inc., which was one of Aviva Plc’s 10 largest investors, cut its holdings 70 percent since the U.K. insurer revealed plans to buy Friends Life Group Plc for 5.6 billion pounds ($8.8 billion).

The asset manager, which increased its Aviva stake to more than 4 percent as recently as October, started to sell shares on Nov. 24, three days after Britain’s second-largest insurer by market value confirmed it was in takeover talks, regulatory filings show. The Los Angeles-based firm continued to sell in December and now owns 1.1 percent, or about 32.1 million shares, according to a filing today.

Aviva this week agreed to buy Friends Life for 394 pence apiece in an all-stock transaction, set to be the U.K. insurance industry’s biggest takeover in 15 years. Chief Executive Officer Mark Wilson said that while the deal had taken many by surprise, it was consistent with the London-based insurer’s strategy of growing the business and increasing cash flow.

“Cash flow is what our investors signed up for,” he told journalists on a conference call Dec. 2. “If an opportunity comes up that delivers cash flow, we should consider it. In my view, it would be imprudent not to.”

In contrast to Capital Group, BlackRock Inc., Aviva’s largest shareholder, gradually increased his stake to 6.4 percent, or about 189.1 million shares, from 6.1 percent, regulatory filings show. Franklin Resources Inc., Legal & General Investment Management and Standard Life Investments maintained their holdings in the British insurer.

Wilson, 48, said he was looking forward to speaking with shareholders, adding that some had indicated the price was too expensive while others said it was too cheap.

Spokesmen for Capital Group, which oversees about $1.2 trillion in assets, declined to comment on the stock sales. An Aviva spokesman wasn’t immediately available to comment. The Financial Times reported the sales earlier.

Shares of Aviva have fallen 6.2 percent to 505.5 pence, since the acquisition was announced on Nov. 21. They are still up more than 12 percent this year, adding about 1.7 billion pounds of market value.


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