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Standard Life, European's largest mutual life assurer, is pressing ahead with plans to float on the London Stock Exchange this summer. The member-owned Standard Life Assurance Society has rejected an all-share merger approach from an unidentified rival firm and intends to become a public listed company in July. Of course, the flotation will be subject to winning approval to demutualise from three-quarters (75%) of its eligible members. Almost six years ago, Standard Life fought off an attempt by members to force it to demutualise, but the board refused to support these rebels, so the proposal didn't gain a majority vote. However, the Society's board is now in favour of demutualising, so the vote should go in their favour. Voting packs are being sent out today, with the vote taking place at a Special General Meeting on 31 May. If members do vote in favour of transforming the Society into Standard Life plc, then, after clearing the final legal and regulatory hurdles, it will become a public listed company in July. However, only about a third of the Society's seven million worldwide customers will be in line for free shares. Only those members who have a stake in Standard Life's with-profits fund will receive windfalls -- a total of 2.4 million eligible policyholders (including myself). Then again, other customers may still benefit from the flotation, as they could yet be offered cut-price shares in the group. The flotation will raise £1.1bn in extra funds for the company, with around £4bn of capital being distributed to eligible members in the form of free shares. This will be the biggest stock-market flotation for five years (since the listing of Orange in 2001). How much are you in line for? Members will receive a fixed number of free shares to compensate them for loss of membership, plus additional shares to reflect the length of their membership and the size of their investment in the Society's with-profits fund. Also, to encourage members-turned-shareholders to hang onto their shares, Standard Life will add one share for every twenty shares that they continue to own a year after the initial public offering. With, say, £4bn being shared among 2.4m members, the average payout will be around £1,667. However, around half of the eligible members will get free shares worth £1,000 or more, with the remainder receiving between £500 and £1,000 apiece. The shares will be priced between 240p and 290p and, at the average of 265p, the plc will be worth around £5bn, £1bn of which will be used to strengthen the company's finances. Each member will receive 185 shares, worth between £444 (at 240p) and £537 (at 290p), with the average minimum payout being £490 (at 265p). If Standard Life successfully lists on the London Stock Exchange, it will be worth around £5bn, making it the UK's fifth-largest listed insurer after Aviva (LSE: AV.) , Prudential (LSE: PRU), Legal & General (LSE: LGEN) and Old Mutual (LSE: OML). Therefore, there's a strong chance that shareholders will receive takeover proposals once the Society has gone public, so it may pay to hang onto the shares to see what happens. I certainly plan to keep hold of mine! What's more, policyholders will welcome the turnaround in profits announced today: having lost £340mn in 2004, Standard Life made a pre-tax profit of £152m in 2005, thanks to higher new business contributions, plus three thousand job cuts. Finally, if you hear a hefty thud from your doormat later this week, it's probably the eighty-page "Vote and Proposal" pack arriving through your letterbox! More: Check out this cheap, simple stock-market investment | Buy and sell shares for less! Cliff has been a Standard Life with-profits policyholder since 1992, and owns shares in Legal & General.
