Dutch banking services group SNS Reaal, which provides retail banking and financial services to small and mid-sized companies in the Netherlands, says it will acquire the Dutch insurance operations of France''s AXA for €1.75 billion ($2.35 billion / Rs10,050.25 crore).

SNS, which went public in May 2006, had said that it planned to use the proceeds to fund acquisitions and last year acquired the non-mortgage business of ABN AMRO for €810 million. The acquisition would enable the Dutch group to double the market share of its domestic insurance operations to 9.2 per cent and save costs.

SNS is paying AXA cash plus accrued interest of 4 per cent from 1 January, 2007, which will be the effective date of the acquisition. The deal is expected to close in the second half of 2007.

SNS Reaal, has also disclosed that the acquisition would be earnings accretive from 2008 and would be partly funded by an equity issue.

SNS says it would help fund the deal by selling €350 million in equity apart from using its existing funds. Reaal''s controlling shareholding foundation will concurrently sell up to €200 million worth of existing shares, with an over-allotment worth €50 million.

At current prices, that would take the foundation''s stake in SNS from 65 per cent to about 54 per cent.

SNS expects the acquisition of AXA''s Dutch operations to yield a pre tax cost saving of €50 million by 2011.

Lehman Brothers advised SNS Reaal on the deal.