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Friends Prov rejects Resolution takeover proposal

Friends Provident has rejected an initial takeover proposal from Resolution, saying the offer is not in the best interest of its shareholders.

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.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Friends Prov rejects Resolution takeover proposal
    I hope that Friends Provident continues to reject the takeover overture from Resolution. Resolution was set up to own and operate insurers that are no longer looking for new business, and generally, for these organisations, it is not such a good deal for policyholders.

    Friends Provident, on the other hand, is a thriving and successfull insurer, so I cannot see any gain to policyholders or shareholders from such a takeover. Indeed, the board of Friends Prov and the shareholders overwhelmingly rejected the last takeover bit from Resolution a couple of years ago, so I do not see why they are coming back now, and what has changed that would make s new bid any more attractve. Furthermore, what I object to in many takeovers, is that the new owner uses the assets of the company it is taking over to fund the takeover, leaving the purchased company deeply in debt.

  2. Friends Prov rejects Resolution takeover proposal
    I don’t really care what happens to Friends’ Provident. Apart from the odd pure protection case, we’ve done no business at all with them since 5th April 2001. All they’ve done since then is betray the IFA sector whose support they were so glad to have in the nineties. If, as a result, Friends’ Provident can no longer stand financially on its own feet, it only has itself to blame.

  3. Gamekeeper turned poacher
    Am I alone in questioning the ethics of having the former head man at the FSA involved in mopping up the life offices the regulator brought to their knees? What does he know that the rest of us can only imagine? Is a public inquiry called for?

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