20th Jul 2009 17:21
20 July 2009
Friends Provident Rejects Resolution's Latest Proposals
In a meeting today with Resolution and its advisers, Friends Provident explained that Resolution's proposals are flawed in a number of significant ways that it sought to address in its own proposals to combine the two companies.
In particular, Friends Provident continues to believe that key elements of Resolution's structure and its governance arrangements are totally inappropriate in a public company context and materially out of line with currently accepted best governance practice, including:
Substantial management functions outsourced to a third party management company: Resolution Operations LLP;
No representation on the main board of Resolution of the key members of the Resolution management team (who all currently sit within Resolution Operations LLP) reducing significantly any accountability to shareholders; and
Significant fees and preferential entitlements accruing to third party vehicles controlled by and for the sole benefit of the individuals represented by Resolution Operations LLP.
These structural and governance concerns remain so fundamental that the board of Friends Provident does not believe there can be any progress in discussions with Resolution until they are addressed.
In addition to their concerns about the governance and structural aspects of Resolution's proposals, the board of Friends Provident believes that the dilution of the Friends Provident shareholders' economic interests through the significant fees and preferential entitlements that would accrue to the sole benefit of the members of Resolution Operations LLP is wholly unacceptable, particularly at a time when market valuations are at a such a depressed level.
Friends Provident continues to see advantages in the consolidation of the UK Life Industry, but also believes that a consolidation of Friends Provident and Resolution can only be agreed on terms that are fair to both sets of shareholders and with a structure that complies with corporate governance best practice and is appropriate for the implementation of the combined group's follow-on acquisition strategy. Resolution's current proposals do not achieve these objectives.
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 WiseConor Hillery
Finsbury
+44 (0)20 7251 3801
Roland Rudd
Rollo Head
Vanessa Neill
This announcement does not constitute an offer or invitation to purchase any securities nor an announcement of a firm intention to make an offer under Rule 2.5 of the City Code on Takeovers and Mergers. Accordingly, there can be no certainty that any offer will ultimately be made, nor as to the terms on which any offer would be made.
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 ProprietateaFLG.L