Colchester-based assurance giant Royal London has succeeded in a £1.1 billion takeover bid for a fellow insurance firm.

It comes just two months after the company axed more than 750 jobs in the town.

No new jobs are expected to be created in Colchester from Royal London's planned buyout of Edinburgh-based pensions provider Scottish Life.

But it will mean windfall payments for Scottish Life policyholders of about £4,000 each. The deal is expected to be completed by the middle of next year with payments following soon after.

News of the buyout has met with a mixed reaction in the town.

Terry Sutton, Colchester Council's portfolio holder for employment, economic development, leisure and tourism, today (Monday) said: "It is a shame that there will be no boost in job numbers but it shows the company is being progressive in the market.

"If it stabilises Royal London's position in Colchester it's got to be good news in the wake of the bad news we have had in recent months."

But there is bitterness amongst staff who are still coming to terms with Royal London's decision to shed about two-thirds of its workforce in the town.

Union representative Grenville Krinks said: "There is bitterness felt here in that there's going to be a lot of people getting money out of this, such as Scottish Life policyholders and staff.

"We feel we have been dispensed with at the very first hurdle.

"To be honest most of the staff affected by job cuts are now looking forward to leaving.'

Royal London chief executive Mike Yardley said of the new deal: "We are creating a leading UK life and pensions group with nearly £30 billion of funds under management.

"This transaction diversifies Royal London's distribution capability by adding an established position in the IFA market and significantly increases our new business volumes.

"As a result, it strengthens our business and creates enhanced value for our members."

Scottish Life has been circled by suitors for the past few weeks, with speculation focusing on Royal London along with Liverpool Victoria and American firm GE Capital.

Edinburgh-based Scottish Life has about 600,000 policyholders, of which 250,000 hold with-profits policies, and around 1,200 employees. Both sides stressed Scottish Life's Edinburgh headquarters would continue to operate unchanged.

The Scottish Life brand name will also be kept, although new policies will be issued under the Royal London name.

Converted for the new archive on 19 November 2001. Some images and formatting may have been lost in the conversion.