The Aeroplan Income Fund is heading abroad to buythe biggest loyalty program operator in Britain for $754 million.

Aeroplan is acquiring privately held Loyalty Marketing Group (LMG), which operates thepopular Nectar loyalty program.

Nectar is thelargest customer rewards program in Britain, with half of all British households enrolled.Customers earn points at 15retail brands, including BP, Sainsbury's and Hertz.

"The acquisition of LMG gives us unparalleled breadth of retail, financial services, travel, as well as data analytics skills and experience," Aeroplan CEO Rupert Duchesne said in a statement.

"Through this transaction, we will assume a dominant position in one of the most important and active loyalty markets in the world whilst acquiring expertise that will help accelerate our retail expansion in Canada," he said.

LMG also owns the Air Miles trademark around the world. But it does not own the Air Miles program in Canada. Air Milessaid the Aeroplan purchase of LMG would not affectthis country'sAir Miles program."In addition, the Air Miles reward program in Canada maintains a perpetual licence to the AirMiles trademark in Canada," it said in a statement.

Aeroplan said it will continue to operate separately from LMG. The British company's management will be retained.

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Aeroplan has five million active members.

Aeroplan —which has been substantially spun off by its parent, Air Canada owner ACE Aviation —will finance the deal through existing cash and debt. It expects the deal will be "modestly accretive" to its distributable cash in 2008 and should closelater this month.

Aeroplan's units fell 75 cents to close at $22.25 in Monday trading on the TSX.