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Structure and governance assurances helped seal deal

Friends Provident says clarifications about Resolution’s structure and governance has helped it agree to the acquisition vehicle’s latest offer.

Under the deal, announced on Tuesday, Resolution’s acquisition vehicle Resolution Holdings will be renamed Friends Provident Holdings.

Friends Provident chief executive Trevor Matthews will retain his role in the new company, as will chief financial officer Evelyn Bourke. However, chairman Sir Adrian Montague will step down on completion of the deal, expected for October, and his replacement has not yet been announced.

Friends’ existing non-executive directors have been invited to sit on the Friends Provident Holdings board and two have also been asked to join the board of Guernsey-based Resolution Limited. Resolution’s Clive Cowdery and John Tiner are also expected to sit on the board of Friends Provident Holdings.

The acquisition is also conditional on the transfer of Resolution’s existing secondary listing to a full primary listing. On transfer to a primary listing, Resolution will be subject to the full provisions of listing rules.

The provider says: “Friends Provident has now had the opportunity to examine Resolution’s business model and structure through engagement with Resolution and with, among others, the FSA and major shareholders of both companies.

“Friends has concluded that Resolution’s governance arr-angements, business model and alignment with investors reflect and support its objective to create value for public market investors from the restructuring of financial services businesses.”

Resolution has offered a total cash and share consideration of £1.86bn based on a Resolution share price of 88.25p. It is offering 0.9 of a new Resolution share per Friends share. It has offered each Friends shareholder cash for up to the first 2,500 shares held at 79.4p per share and a total cash consideration of up to £500m. The offer represents 69 per cent of the provider’s adjusted EEV as at June 30, 2009.

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