British insurer Aviva reveals talks to buy rival for £5.5b

British insurer Aviva said late Friday that it is in advanced talks to buy rival Friends Life for £5.5 billion ($8.6 billion, 6.9 billion euros) to create the nation's biggest insurance, savings and asset management firm.

The pair said in a statement that they have reached agreement on key terms of a "possible" deal, under which Friends Life shareholders would receive 0.74 Aviva ordinary shares for each Friends Life ordinary share.

The possible offer is worth 398.9 pence per Friends Life share, a premium of 15 percent from Friday's closing level.

"The boards of Aviva and Friends Life ... confirm that they have reached agreement on the key financial terms of a possible all share combination of Aviva and Friends Life," the two FTSE 100 companies said in a statement issued after the market close.