Friends Life has been forced to issue a statement to investors as its stock price fell nearly 6 per cent this morning.
The note says: “Friends Life notes today’s share price movement and reminds investors that, as disclosed in the Friends Life Scheme Document published on 19 January 2015, all Friends Life ordinary shares on the register as at 6pm on 9 April 2015, being the Scheme Record Time and Friends Life Dividend Record Date, will be entitled to receive the second interim dividend of 24.1 pence per share. Friends Life shares should not trade ex-dividend ahead of 6pm on 9 April.
“It is intended that dealings in Friends Life ordinary shares will be suspended from 7.30am on 10 April 2015, in anticipation of the scheme of arrangement to implement the acquisition of Friends Life by Aviva plc becoming effective.”
A stock market analyst, who asked not to be named, says: “The market – collectively, it seems – thought FLG was ex-dividend this morning, so marked the shares down 24.1p. It turns out that the ex-dividend date is actually tomorrow night. So the shares have now lifted up again.”
Following the publication of the statement, the share price recovered to its previous level.
In normal circumstances the record date – when a firm determines who its shareholders are – is preceded by the ex-dividend date. At this point the market normally reprices a stock by the expected dividend.
A Friends Life spokesman says the market misunderstood that because of the firm’s acquisition by Aviva there is not an ex-dividend date for Friends Life. Shareholders on the Friends Life register at 6pm on 9 April will receive both the dividend and 0.74 new Aviva shares for each Friends Life share they own.
In March, shareholders approved the merger of Friends Life with Aviva, which is due to complete this month.