UK’s Friends Provident unable to refuse Resolution offer

After rejecting four previous offers from the buyout firm Resolution Ltd, the 177-year-old UK insurance and pension provider Friends Provident Plc agreed to a 1.86 billion pounds buyout offer from Resolution on Monday.

Resolution, the insurance consolidation vehicle of insurance tycoon Clive Cowdery, is offering an all-share deal comprising of 0.9 of its own shares for every share of Friends Provident, valuing Friends shares at 79.4 pence each.

The offer is nearly 10 per cent more than its initial offer last month of 0.82 of its shares for each of Friends Provident share, which had valued Friends at 1.7 billion pounds.

Resolution is also offering a 500 million pound cash alternative for the first 2,500 shares held by investors of Friends, which will benefit nearly 700,000 small shareholders. The cash offer will be funded from the 600 million pounds that Resolution raised from its IPO in December.

The Dorking-based Friends Provident, which is 20 per cent owned by 700,000 retail investors, had rejected Cowdery four times in the past, the latest being on 28 July. (See: Friends Provident rejects Resolution's sweetened offer) 

Friends Provident, agreeing that consolidation was necessary in the UK insurance market, made a counter-bid for Resolution on 17 July, which was rejected by the buyout company.