LONDON (AP) — British buyout fund Resolution Ltd. said yesterday that it has agreed to acquire a package of UK businesses from French insurer AXA SA in a deal worth £2.75 billion ($4.1 billion).

Resolution says it intends to merge the AXA businesses with another British insurance company, Friends Provident, doubling Resolution's share of the UK life and pensions market.

It aims to save £75 million a year in costs within three years by combining the operations.

Resolution is paying £2.25 billion in cash and up to £500 million in deferred compensation. The purchase is financed by a rights issue of £2.05 billion and an acquisition facility of £400 million.

"We believe this is a sensible deal that will further enhance the management's historic track record of buying undervalued assets, restructuring them and selling them on to create value for shareholders," said Jonathan Jackson, head of equities at Killik & Co. in London.

Jackson said the acquisition represents the second step in Resolution's UK Life Project, which targets growing its life and asset management business to £10 billion on an embedded value basis by the middle of next year.

Embedded value, used for evaluating insurance companies, reflects expected future cash flows from sales in the year and updating assumptions based on experience.

The Unite union, representing AXA staff in Britain affected by the deal, said it was worried that employees might lose their current pensions.

"The sale of the AXA life protection business will cause the workforce considerable anxiety as they now have serious concerns about the security of their jobs and the drive by Resolution to reduce costs," said Siobhan Endean, a national officer for Unite.

The deal is subject to approval by Britain's Financial Services Authority and Resolution's shareholders.

"The enlarged group will be well positioned to create value from enhanced cashflow, significant synergies and selected profitable new business growth," said John Tiner, chief executive of Resolution Operations LLP, part of the Resolution Group.

"We see a strong pipeline of potential further consolidation steps which will help complete the company's UK Life Project, and we will remain highly disciplined on the selection and pricing of possible transactions," Tiner said.