JC Flowers builds secret stake in Friends Provident

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Private equity group, JC Flowers, is believed to be building a secret stake in Friends Provident, indicating that the group could launch a A?4 billion takeover bid for the insurer.

Over the last 7 days, it is believed that Flowers has acquired a stake of 1.7% and comes just 2 weeks before Friends is due to reveal the results of a strategic review on January 31. The review will lead to a sale of all or part of the group.

Since its A?8.4 billion merger with Resolution collapsed, Friends has been vulnerable. The company has been in trouble for nearly a year after it was forced to admit last March that it would not meet ambitious new-business profit targets.

Furthermore, in late 2007, the insurance company said it would need to raise A?500 million in a bond issue to fund its growth. F&C Asset Management, the listed fund manager 53% owned by Friends, also warned on profits. Furthermore, Friends is on the lookout for a new chief executive to replace Philip Moore, who was ousted last year.

Previously, JC Flowers has looked at buying Friends. Last May, the private-equity group trawled round insurers looking for partners to launch a joint bid of about A?5 billion. It is also rumoured that the group held tentative talks with Axa of France, while AIG, Swiss Re and Zurich Financial Services were also contacted.

In addition, JC Flowers revealed plans to rescue Northern Rock late last year but abandoned plans after it renewed its interest in Friends.


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