Chesnara (CSN) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition accelerates strategic growth, enhances scale, and reinforces position as a leading life and pensions consolidator in the UK.

• HSBC Life U.K. offers complementary products, expanding the product suite and increasing UK market presence.

• Transaction adds approximately £4 billion in assets under administration and 454,000 policies, creating a combined group with £18 billion AuA and 1.4 million policies.

• Supports future M&A ambitions and maintains disciplined financing capacity.

• Product suite offers new business opportunities, particularly in open onshore bonds and protection products.

Financial terms and conditions

• Total consideration is £260 million, funded by £55 million cash, £65 million RCF drawdown, and £140 million fully underwritten rights issue at 176p per share.

• Rights issue is on a 10-for-19 basis, at a 40% discount to prior closing price and 30% to TERP, raising £140 million gross proceeds.

• Consideration represents 83% of HSBC Life U.K.'s eligible loan funds/Solvency II Own Funds.

• Non-refundable £20 million break fee payable if the agreement is terminated in most circumstances.

• If the acquisition does not complete, rights issue proceeds may be used for alternative acquisitions or returned to shareholders.

Synergies and expected cost savings

• Expense synergies expected from migrating policy administration to SS&C Technologies platform.

• Capital synergies anticipated post-Part VII transfer and through management actions, including mass lapse reinsurance and FX hedging.

• Additional value expected from new business and further expense savings.