Under the agreement L&G will purchase Nationwide’s wholly owned subsidiaries, Nationwide Life and Nationwide Unit Trust Managers.
The consideration for the sale will be payable in cash from L&G’s existing resources. Consideration will be set by reference to the financial position of the companies at the date of completion using an agreed basis of valuation.
The current value of the two companies based on the March 2006 valuation is £285 million.
Robin Bailey, divisional director of insurance and investments at Nationwide, said: “Offering life products from a regulation point of view can be a challenge. By distributing L&G life products we will be able to offer better products and service.
“Already we are a member of L&G’s mortgage club and we hope that, by joining distribution forces we will be able to strengthen our relationship.
Simon Webster, managing director at Facts & Figures Financial Planners Ltd, commented: “This is just market forces. L&G is a major player in the protection industry so, this will be a good mix for Nationwide, which is not so big. L&G will be able to distribute more financial services products.”
“As for impacting on legal and General’s mortgage club, I cannot see this distribution deal making much difference, their club already has several lenders.”
