Earlier today, Resolution tabled a new cash and shares offer for Friends Provident that takes into account the proposals set out by Friends Provident last week, however the board of Friends Provident says that key elements of Resolution’s structure and its governance arrangements are “totally inappropriate in a public company context” as well as falling outside of what is seen as best governance practice.
The board highlighted the outsourcing of substantial management functions to Resolution Operations LLP as one of three bones of contention.
Other concerns were that there was no representation on the main board of the key members of the Resolution management team, who sit within Resolution Operations LLP, reducing accountability to shareholders and that fees and preferential entitlements from third party vehicles are controlled by and for individuals represented by Resolution Operations LLP.
Friends Provident says that these structural and governance concerns are so fundamental that no further talks can continue with Resolution until they are addressed. The board has also branded the dilution of Friends Provident shares shareholders’ economic interests through the significant fees and preferential entitlements that would accrue to the sole benefit of Resolution Operations LLP as wholly unacceptable, particularly as market valuation are at a low point.