Friends Provident back in takeover spotlight
A sharp fall in annual profits will thrust life and pensions company Friends Provident back under the takeover spotlight this week.
New York-based private equity group JC Flowers is understood to be waiting for Friends to unveil the figures before deciding whether to launch an offer.
Flowers had been mulling a proposal worth £4bn (€5.2bn) in January, but the Sunday Express suggested a figure closer to £3.5bn (€4.56bn) was now more realistic after a sharp fall in the insurer’s share price.
Friends recently warned that Tuesday’s profits will be virtually wiped out by accounting charges and because of customers cashing in policies earlier than expected. It made a surplus of £509m (€665m) in 2006.
The group has been left vulnerable to a takeover after the collapse of a merger with closed life fund manager Resolution, a deal which was gatecrashed by rival suitor Pearl.
The merger’s demise raised concerns that Friends Provident would not have enough financing to fund expansion.
A strategy review has suggested the company is pinning its hopes on a restructuring and partial break-up, which it is understood could raise more than £1bn (€1.3bn).
It aims to save nearly £60m (€78m) from job cuts and is set to radically down-size, putting its majority stake in investment group F&C Asset Management up for sale, alongside two other non-core businesses.
Friends has hired Trevor Matthews from Standard Life as chief executive, but he will not be able to start until the summer.
The company employs almost 4,000 staff, excluding the F&C business, across offices in locations including Manchester, Exeter, Dorking and Salisbury.
Nic Clarke, an analyst at Charles Stanley stockbrokers, said: “Friends Provident remains rudderless with little positive likely to happen to the stock until July, unless an investor like JC Flowers decides to make an offer for the stock.”
