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Friends backs fresh Resolution bid

Friends Provident is entering into talks with Resolution on the strength of an improved bid.

In a stock market announcement this morning, Friends confirms it has received a further proposal by Resolution which is good enough to merit entering into talks with a view to the board recommending the bid to shareholders.

The new proposal values the insurer at around £1.86bn, 13 per cent higher than Friday’s closing share price, with an exchange ratio of 0.9 new Resolution shares for each Friends Provident share.

It also includes a partial cash alternative subject to the maximum cash available not exceeding £500m.

The news follows months of bids and counter-bids between the two companies, the latest of which was a proposal by Resolution that was rejected by Friends on July 27.

It involved Resolution acquiring Friends Provident for 0.82 of a Resolution share for each Friends Provident share, valuing Friends Provident at 74.6p a share at its then share price. The proposal included a cash element of £500m.

The announcement says: “Friends Provident confirms that it has received a further proposal on behalf of Resolution Limited.

“The board of Friends Provident believes that this revised proposal has been sufficiently improved to justify entering into discussions with Resolution with a view to recommending its proposal.

“Prior to the receipt of this proposal Resolution had completed a period of due diligence.”

Friends says that while discussions are ongoing, it is uncertain whether any offer will result or what the final terms of an offer might be.

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