Friends Provident shuns new JC Flowers offer
After a tough 12 months, insurer Friends Provident now feels able to reject a £3.5 billion take-over bid from private equity house JC Flowers.
JC Flowers has made an offer of 150p a share, however, Friends insists that this proposal ‘significantly undervalues Friends Provident and its prospects and does not represent a basis for discussion’.
The Friends’ board, run by chairman Sir Adrian Montague, feels it cannot sell the company for less than 160p. It believes that any lower would be less than the insurer’s embedded value, or the long-term value of its policies.
The insurer is currently without a chief executive after the departure of Philip Moore. He will be replaced by Trevor Matthews who arrives from Standard Life later this year.
Last month, respected finance director, Jim Smart, announced he was to leave Friends Provident in August.
JC Flowers, led by Chris Flowers, has made several offers for Friends, at lower levels on each occasion. It is believed JC Flowers could return with another offer. It holds almost 3% in the insurer.
Last month, Friends confirmed it made a loss of £113 million for the 12 months to December, compared with a profit of £491 million a year ago. This was primarily due to savers withdrawing money from products that have mostly performed well below those of rivals.
A merger with Resolution Life collapsed and rumours of a split at the top over strategy emerged.
Friends Provident shares have halved in the last year but gained 4.4p to 124½p yesterday.
Friends was established in 1832, when it was formed to alleviate the hardship of Quaker families. It is headquartered in London and employs 4,000 across the UK. The last 12 months have been the most challenging in its 176 year history.