Friends Provident says while it is “open-minded” about the benefits of consolidation, Resolution’s all share offer of 0.8 new Resolution shares for every Friends Provident share is “wholly inadequate”.
This would have led to Friends Provident shareholders holding approximately 74 per cent of Resolution.
In a letter to the Resolution board, Friends states: “The proposed terms offer Friends Provident shareholders little or no premium or uplift in value without a significant re-rating of the combined group, the substantial majority of which would be represented by Friends Provident’s existing businesses.
“The governance structure of the Resolution Group as it is currently constituted would offer Friends Provident shareholders less transparency and a structure significantly different from recognised public company best practice.”
Friends Prov adds that the complexity of the proposed board and management structure would limit the remit of Friends Provident’s management team strategically and operationally.
While its initial proposal was rejected by Friends, Resolution says it has received “constructive feedback” and is considering its response.
A spokesman for Resolution says it’s too early to detail what plans Resolution has for Friends-owned Sesame, which is currently in talks to take over support services firm Bankhall.
Resolution was formed for consolidation and restructuring in the financial services industry and says its current focus is on the UK life assurance and asset management sectors.
The company is assessing possible transactions with a number of UK life assurance companies, including both listed and privately-held groups.
Resolution was forced to halt acquisition plans in March when the FSA launched an investigation into the company and a number of its directors.
In May the FSA announced it had concluded the investigation and would not be taking any disciplinary action.