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Stronger firms mean that targets are thinning out

Advisers believe Clive Cowdery’s consolidation vehicle Resolution could struggle to convince potential targets to surrender now that share prices have bounced back.

The firm announced last Aug-ust that it was to acquire Friends Provident in a £1.86bn deal but has not done another deal since.

Pharon IFA Nick O’Shea says: “Any company with that objective would have targets but perhaps the targets are not surrendering themselves.

“Previously, we have had the situation where companies nee-ded to be bought in order to survive because they had issues.

“Companies are feeling a lot more confident than they were a year or two ago because the economy is getting a little bit stronger, share prices are getting better and investors are holding on to their shares because dividends are starting to come back.

“These firms are probably thinking, let’s give it another 12 months and just wait and see, so unless Resolution does a hostile takeover, which nobody particularly enjoys, I doubt we will see any activity for a while.”

O’Shea believes Resolution may have got it wrong thinking that the market was ripe for consolidation. He says: “I think it is possible they got it wrong. I would not be surprised if there was even a break-up of insurance companies in the next few years.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “There are not the same opportunities as there was in the past because the companies are better run. In the early days of consolidation, they could sweep up the basket cases. Whe-ther there is the same ability to make money on the deal now, I am not entirely sure.”

A Resolution spokesman says: “The company remains confident of successfully completing its life insurance and asset management project.”

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