Friends Provident agrees to Resolution takeover

[August 11, 2009]  LONDON (AP) -- British insurance and pensions provider Friends Provident PLC on Tuesday agreed to a 1.86 billion pound ($3.06 billion) offer from buyout firm Resolution Ltd.

The deal was recommended to shareholders and values Friends Provident shares at 79.4 pence ($1.30) each. A cash alternative for the first 2,500 shares held by investors will be offered, benefiting around 700,000 smaller shareholders in the business.

Friends chairman Adrian Montague said the "transaction offers shareholders the choice of an attractive premium on exit or the opportunity to be part of Resolution's first financial services restructuring project."

The deal represents the first step in a planned expansion of Resolution by founder Clive Cowdery, who plans to acquire other struggling financial firms. His plan is to restructure companies within two to four years.

Manoj Ladwa, ETX Capital senior trader, said other well known UK businesses could soon be targeted by Resolution.

"A few more household names in the life insurance market could be in Resolution's sights -- companies like Lloyds Banking Group's Scottish Widows and Clerical Medical, or the UK life operations of companies such as Aegon, Axa, Prudential or Zurich Financial Services could be next," he said.

Cowdery formed the company last fall after selling an earlier company that was also called Resolution.

Friends Provident had dismissed an earlier 1.7 billion pound ($2.8 billion) approach as "wholly inadequate."

The firm's life and pensions business has 2.5 million policyholders. It managed 7.7 billion pounds ($12.7 billion) of pension funds during the first half of this year.

It employs 3,600 workers and was founded in 1832.

[Associated Press]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.