Standard Life has agreed to sell its Canadian operations for C$4bn (£2.2bn) to Manulife Financial and said it would return £1.75bn of this to shareholders.
The distribution will be worth roughly 73p per share by way of a B/C share scheme, allowing shareholders based in the UK to choose whether to receive the proceeds as income or capital.
Following the return of capital, Standard Life said it intends to carry out a share consolidation.
According to company the sale enhances its medium-term earnings profile and, combined with the Ignis purchase and the return of capital, should be earnings accretive. In addition, the group expects to maintain its progressive dividend policy.
"We view this as a fabulous deal for shareholders," said analyst Barrie Cornes from broker Panmure Gordon, while ShoreCap's Eamonn Flanagan gave the company "full marks" for the move.
The two companies have also made a collaboration agreement in principle for Manulife to distribute Standard Life Investments' products via the Canadian company's network in Canada, the US and Asia.
New York Stock Exchange-listed Manulife is expected to complete the deal, subject to the receipt of all necessary approvals, in the first quarter of next year.
David Nish, chief executive of Standard Life said: "The sale of our Canadian operations to Manulife, and the formalising of a collaboration agreement in principle to distribute Standard Life Investments' products via Manulife's network in Canada, the US and Asia, is a significant moment for both organisations."
He added: "Manulife is very well positioned to support our clients, intermediaries and partners in Canada going forward."
The company said the sale was a major step in its strategy "to build a global investment solutions business" and would accelerate the growth profile of the group through advancing its investments arm's global distribution and growth prospects through wider collaboration with Manulife.
Manulife confirmed that Standard Life decided to explore the sale of its Canadian operations through a competitive process several months ago.
ShoreCap's Flanagan added that the disposal accelerates Standard Life's strategy of asset gathering and asset management and removes a major exposure of the group's balance sheet to spread and guarantee risk in his view.
"The results from the Canadian operation have been volatile over the past few years and form a major element of the group's exposure to spread and guarantees - both of which we feel that the company has not been entirely comfortable with.
"In addition, the agreement for Manulife to act as distributor for SLI's funds should deliver growth in funds thus accelerating Standard Life's focus as an asset gatherer and manager."
Panmure said the deal represented a 19.5 times price-earnings multiple and a price-to-book multiple of 1.9 times.
Shares in Standard Life were up 8.1% to 417.4p at 09:50 on Thursday.
We expect the market to respond favourably to this announcement. Finally, we applaud the return of capital, which demonstrates a laudable focus on capital discipline.
Nevertheless, we reiterate our HOLD recommendation, preferring the spread companies such as Pru^ (PRU, Buy) and Legals^ (LGEN, Buy) and believing there remain 'cleaner' ways to play the asset management sector. However, .