British Insurer Accepts $3.1 Billion Buyout Bid

[Heidi]

Source: New York Times

Published: August 11, 2009
PARIS — In what may be the first step in a shakeup of the British life insurance industry, Friends Provident has accepted a revised bid from Resolution worth £1.86 billion, or $3.1 billion, after rejecting two previous offers from the buyout firm.

Resolution announced Tuesday that it would offer 0.9 shares for each share of Friends, almost 10 percent higher than its initial offer last month, and said it would give Friends’ shareholders the option to sell up to £500 million of stock in exchange for cash.

This is the first acquisition for Resolution, founded by the former head of General Electric’s European insurance unit, Clive Cowdery, as well as major turning point for Friends, which was a mutual until it first listed in 2001. The cash part of the deal is coming from the £600 million that Resolution raised with its initial public offering in December.

On Tuesday, Friends reported a drop of 38 percent in so-called underlying profit for the first half, which differs from book profit in that it is adjusted for one-off payments or other rare events. The company added that its outlook for the year remained cautious, but it nonetheless maintained a dividend of 1.3 pence per share.

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Trevor Matthews, chief executive of Friends Provident, said the management of the company was “enthusiastic about the future with Resolution. We look forward to playing a leading role in industry consolidation and re-shaping the new business landscape.”

Read more: http://www.nytimes.com/2009/08/12/business/global/12friends.html