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
Aegon, GE Capital, Liverpool Victoria and AMP are all known to be on the
Policyholders are being given 200 shares, which are expected to be valued
at between £450 and £540. With-profits policyholders will get
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