17th Jul 2009 12:58
17 July 2009
Friends Provident proposes way forward with Resolution
The Board of Friends Provident Group plc ("Friends Provident") has today sent to the Chairman of Resolution Limited ("Resolution") a letter setting out a proposed structure for effecting a possible combination of the two groups.
In common with Resolution, Friends Provident sees advantages in UK life industry consolidation and believes that there is a real opportunity for Friends Provident and Resolution to pool their talents and capabilities in leading this consolidation.
A combination of the two businesses can only be agreed on terms that are fair to both sets of shareholders and with a structure that is appropriate for the implementation of the combined group's follow-on acquisition strategy.
The proposal put forward by Friends Provident envisages that Friends Provident would become the holding company of the combined group, with Resolution shareholders exchanging their shares in Resolution for new shares in Friends Provident. The proposal would deliver the following key benefits:
A unified management and board better able to both manage and supervise the existing Friends Provident businesses as well as any future acquisitions;
A closer and fairer alignment of executive compensation and benefits with shareholders' interests;
Full transparency for shareholders, customers and regulators in a structure complying with Corporate Governance best practice;
The maintenance of Friends Provident's primary listing on the London Stock Exchange and UK index membership; and
The creation of a more effective acquisition currency to assist in future consolidation transactions.
In combining Resolution with Friends Provident under the existing Friends Provident holding company, Friends Provident's proposal also allows for a simpler overall group structure and governance in line with accepted public company best practice. Accordingly, the proposal submitted to Resolution incorporates:
A unified Board and management structure comprising a combination of Resolution and Friends Provident Executives and Non-Executives including full participation from those Resolution Executives currently separated in the Resolution Operations LLP advisory vehicle;
Proposals for Mike Biggs to become Chairman of the enlarged group with Clive Cowdery as Executive Deputy Chairman responsible for consolidation strategy. Trevor Matthews would continue in his current role as Group Chief Executive;
The termination of the current rights and preferential entitlements accruing to Resolution Capital in exchange for an appropriate share of the fully diluted equity of Resolution delivered in restricted form and vesting over a number of years; and
The creation of new and demanding incentive arrangements for the combined Resolution/Friends Provident team designed to reward genuine out performance in the future.
Friends Provident's proposal today has focused on the most appropriate structure to effect a combination of the two groups. It has not addressed the issue of terms but, while it has made clear that the terms proposed to date by Resolution remain wholly inadequate, it has invited further discussions with Resolution to agree an appropriate exchange ratio.
The proposal also highlights the importance of their current dividend income to Friends Provident shareholders and that any terms would need to reflect current pay out levels and the need for a meaningful ongoing dividend per share.
Commenting on the proposal, Sir Adrian Montague, Chairman of Friends Provident said:
"Our Board has thought long and hard about Resolution's proposal. We recognise the shareholder value which consolidation could bring and we can see the benefits of combining two strong executive teams with complementary skills and experience.
The potential of the new group will only be realised if we have the right structure from the outset. This is not simply about corporate governance and ensuring that the key executives actually sit on the main board. It is about creating a unified and coherent management structure, with fair common incentives, clear roles and effective accountability.
That is why we have made a proposal today to Resolution that Friends Provident should be the holding company and that there should be a conventional board structure. If Resolution is prepared to accept these fundamental principles, then we would be happy to sit down with them and agree terms which are fair to both sets of shareholders."
Enquiries:
Friends Provident +44 (0)845 641 7814 Sir Adrian Montague Nick Boakes/Peter Timberlake (press)
Chris Ford (investors)
Goldman Sachs International
+44 (0)20 7774 1000 Simon Dingemans
Paul Miller
J.P. Morgan Cazenove +44 (0)20 7588 2828 Tim Wise Conor Hillery
Finsbury +44 (0)20 7251 3801 Roland Rudd
Rollo Head
Vanessa Neill
In accordance with Rule 2.10 of The City Code on Takeovers and Mergers, Friends Provident confirms that as at the close of business on 16 July 2009 its issued share capital consisted of 2,340,000,000 ordinary shares of 5 pence each ("ordinary shares"). The ISIN code for Friends Provident's ordinary shares is GB00B3T69350.
Goldman Sachs International is acting as financial adviser to Friends Provident and no one else in connection with the possible offer for Resolution and will not be responsible to any other person for providing the protections afforded to the clients of Goldman Sachs International nor for providing advice in relation to the possible offer for Resolution or any other matter referred to in this announcement.
J.P. Morgan Cazenove is acting as financial adviser to Friends Provident and no one else in connection with the possible offer for Resolution and will not be responsible to any other person for providing the protections afforded to the clients of J.P. Morgan Cazenove nor for providing advice in relation to the possible offer for Resolution or any other matter referred to in this announcement.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Resolution Limited or of Friends Provident Group plc, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Resolution Limited or Friends Provident Group plc, they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Resolution Limited or of Friends Provident Group plc by Resolution Limited or Friends Provident Group plc, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.
Related Shares:
Fondul Proprietatea