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BlackRock to Sell UK Workplace Pension Division to Aegon

BlackRock, Inc. BLK has agreed to sell its U.K. defined contribution platform and administration business to Dutch insurer and asset manager Aegon N.V. AEG. The terms of the transaction, which is expected to be completed in the second quarter of 2017, were not divulged.

Under the transaction, BlackRock will transfer around £12 billion (($17.6 billion) of assets and 350,000 customers to Aegon. The deal will push Aegon into the top three in the U.K. workplace-savings market and create a £30 billion division.

BlackRock’s Paul Bucksey will become managing director of the pension and administration unit. Given its strength as a leading investment manager, BlackRock will retain its role as the primary investment manager for the clients that will be transferred to Aegon as part of the transaction.

While the deal will strengthen Aegon’s position as a leading player in the U.K. workplace savings market, it will deepen Aegon's relationship with BlackRock, whose remaining £65 billion in U.K. defined contribution business would be focused to provide investment management services to Aegon clients.

Aegon's retention of BlackRock's specialist employees and established systems will provide stability and continuity for trustees, plan sponsors and their advisors. BlackRock will grow its defined contribution investments business by supplying products to pension funds and other providers.

"The pensions and investment landscape has changed significantly in the UK over the last few years," said David Blumer, head of BlackRock EMEA. "Aegon's broad retail product and digital capabilities will best serve the increased demand from employers for holistic retirement solutions in the future."

Adrian Grace, CEO of Aegon UK, said: "The combined strength and breadth of expertise makes us a compelling choice. With employers demanding additional solutions to meet employees' needs to and through retirement, workplace savings are no longer just about traditional DC pensions.”

"This makes it an exciting market and with an expectation it will triple in size over the next 10 years. We are well positioned to take advantage,” he added.

The transaction is subject to regulatory and court approval.

Currently, BlackRock holds a Zacks Rank #2 (Buy), while Aegon carries a Zacks Rank #3 (Hold). Better-ranked investment management firms are SEI Investments Co. SEIC and Cohen & Steers Inc. CNS, both of which sport a Zacks Rank #1 (Strong Buy).

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