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&#39Takeover bidder set to swoop on Friends&#39

IFAs and analysts have cast doubts over the ability of Friends Provident

to stay independent after its stockmarket flotation because a potential

bidder may only need £2bn.

Friends expects to have a market value of between £3.7bn and

£4.2bn after it demutualises and floats on the stockmarket on July 9.

But industry sources bel-ieve a takeover bidder need only offer around

£2bn because £1.4bn of the total value is external capital which

Friends hopes to raise from the float.

IFAs and industry sources predict that a takeover bidder will swoop on

Friends after it demutualises. They believe a bidder could be waiting in

the wings for Friends to float so they can avoid the complicated

demutualisation process.

Aegon, GE Capital, Liverpool Victoria and AMP are all known to be on the

acquisition trail.

Policyholders are being given 200 shares, which are expected to be valued

at between £450 and £540. With-profits policyholders will get

additional windfalls.

Pensions & Investment Management principal Phil Moore says: “It is very

likely Friends will be snapped up. Companies know the best way to increase

market share is to buy someone else. We have to be sure the companies we

recommend are financially secure.”

Cazalet Financial Consulting principal Ned Cazalet says: “The biggest part

of its solvency includes future profits and reinsurance, so its solvency is

artificially inflated. Its financial position is pretty thin and not

sustainable in the long term and it has a low natural market share for


Friends spokeswoman Di Skidmore says: “Merrill Lynch gave us an indicative

market value which makes us pretty sizeable. We are not as small as people

think. Even the biggest companies are subject to takeover but we are

focused on demutualisation and floating. Our technology makes us well

placed for the 1 per cent environment.”

Northern Ireland is considering following the example set by the Scottish

Executive and introducing free personal and nursing care for the elderly.

The Executive has given the go-ahead for an inter-departmental group to be

set up to examine the imp-lications of the move.

Scottish Conservatives have also broken away from their English and Welsh

counterparts, pledging free personal and nursing care as part of their



Generating investment

Merrill Lynch Investment Managers is getting plugged into the world ofheat, light and water with the world utilities fund. Based in Luxemburg, world utilities is a Sicav aimed at investors lookingfor a low to medium-risk fund. It will invest in companies that supplyelectricity, water and gas. It will also target companies that are involvedin new […]

Lamfalussy Report welcomed by ABI and Autif

Last week&#39s Stockholm Summit of EU leaders resulted in further steps towards the creation of a single European financial services market. The Summit which included Prime Minister Tony Blair, adopted The Lamfalussy Report recommending ways to speed up regulation and decision making at the EU level which holds back the market. Both Blair and Conservative […]

Cater Allen buys Chase banking arm

Abbey National&#39s banking subsidiary Cater Allen has bought Fleming PremierBanking from JP Morgan Chase & Co in a £106m deal. Abbey says theacquisition will increase its market share in the mass affluent bankingsector – those with incomes between £30,000 and £100,000 – to 16per cent from 3 per cent. Fleming will initially be run alongside […]

Norwich Union – Business Benefits @ Norwich Union

Tuesday, 15 May 2001.Type: Cafeteria-style group protection product including group income protection, group life cover, group private medical insurance and accident, sickness and unemployment protection for customers with Norwich Union pensions.GROUP INCOME PROTECTIONMinimum benefit/premium: 30 per cent of salary/£500 a year.Minimum-maximum ages: 16-64.Minimum group size: Three.Deferred periods: Choice of 13, 26, 52 or 104 weeks.Charges: […]


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