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Not quite ready to be Friends yet
By Quentin Webb |
July 14, 2009, Tuesday
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Print Edition
Print Edition
FRIENDS Provident Plc, the United Kingdom-based life and pensions company, rejected a takeover proposal from Clive Cowdery's Resolution Ltd, saying the entrepreneur's terms were inadequate, his company was opaque and a tie-up would hobble the life insurer's management.
However, shares in Friends Provident Group Plc leapt, pointing to investor expectations of a sweetened offer, and some analysts hailed what could be the first step in a long-awaited consolidation of the sector.
In a statement yesterday, Friends Provident said Cowdery's Resolution, based on the island of Guernsey, had proposed an all-stock deal consisting of 0.8 new Resolution shares for every Friends share.
But it said this was wholly inadequate to compensate Friends Provident's 750,000 shareholders for a "very different type of investment."
It said the proposed set-up's complexity would hinder Friends Provident management strategically and operationally and would offer shareholders less transparency.
"We are open-minded about the benefits of industry consolidation, but at this stage, the pace, direction and value of your consolidation strategy is speculative and uncertain," Friends Chairman Adrian Montague wrote in a letter to Resolution published yesterday.
The proposed deal would leave Friends shareholders with about 74 percent of the combined group.
In an earlier statement, Resolution said it had got "constructive feedback" from Friends Provident and the target's advisers and was mulling its next move.
Resolution said any offer was likely to be primarily in shares but boosted by some cash from the 600 million pounds (US$967 million) it raised in a December listing.
This is the second time that Cowdery tried to merge with Friends Provident.
However, shares in Friends Provident Group Plc leapt, pointing to investor expectations of a sweetened offer, and some analysts hailed what could be the first step in a long-awaited consolidation of the sector.
In a statement yesterday, Friends Provident said Cowdery's Resolution, based on the island of Guernsey, had proposed an all-stock deal consisting of 0.8 new Resolution shares for every Friends share.
But it said this was wholly inadequate to compensate Friends Provident's 750,000 shareholders for a "very different type of investment."
It said the proposed set-up's complexity would hinder Friends Provident management strategically and operationally and would offer shareholders less transparency.
"We are open-minded about the benefits of industry consolidation, but at this stage, the pace, direction and value of your consolidation strategy is speculative and uncertain," Friends Chairman Adrian Montague wrote in a letter to Resolution published yesterday.
The proposed deal would leave Friends shareholders with about 74 percent of the combined group.
In an earlier statement, Resolution said it had got "constructive feedback" from Friends Provident and the target's advisers and was mulling its next move.
Resolution said any offer was likely to be primarily in shares but boosted by some cash from the 600 million pounds (US$967 million) it raised in a December listing.
This is the second time that Cowdery tried to merge with Friends Provident.
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