British insurer Aviva is selling its stake in joint venture CxG Aviva for €287 million ($369 million) to venture partner Novacaixagalicia (NCG) Banco after a Spanish tribunal ruling cleared the way for a deal.
The cash deal is expected to complete by the end of the year and represents a multiple of 25 times CxG Aviva’s 2013 operating earnings, Aviva said on Friday.
The British insurer is selling off peripheral assets and cutting costs in a bid to improve returns for shareholders.
The tribunal ruling said NCG Banco had breached its shareholder agreement with Aviva following the merger of Caixa Galicia and Caixa Nova into NCG Banco in December 2010, and the bank’s subsequent restructuring in 2011.
The merger of the struggling Spanish savings banks meant NCG Banco had broken its agreement with Aviva to sell insurance exclusively through the joint venture.
“Good price … timing is a nice surprise. And all in cash,” said Gordon Aitken, analyst at RBC.
Aviva’s share price was little changed on the news, trading 0.8 percent up on the day.
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