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Offer for Friends Provident

11th Aug 2009 07:01

RNS Number : 2218X

Resolution Limited

11 August 2009

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OR ANY OTHER JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

11 August 2009

Resolution Launches its Life Assurance Consolidation Project with the Recommended Acquisition of Friends Provident

Summary

The Boards of Resolution and Friends Provident are pleased to announce the recommended acquisition of Friends Provident by Resolution Holdings (UK) Limited, a subsidiary undertaking of Resolution Limited (the "Acquisition").

The key terms of the Acquisition include:

total consideration of £1,858 million (based on a Resolution Share price of 88.25 pence as at close of trading on 7 August 2009);

0.9 of a New Resolution Share per Friends Provident Share;

cash consideration for up to the first 2,500 shares held by each Friends Provident Shareholder at 79.4 pence per Friends Provident Share;

total cash consideration of up to £500 million at 79.4 pence per Friends Provident Share (including the cash consideration in respect of up to the first 2,500 shares);

total consideration representing 69 per cent. of adjusted EEV as at 30 June 20091;

transfer to a primary listing on the Official List of the UKLA at completion;

inclusion in FTSE index expected to follow completion;

Friends Provident interim dividend of 1.3 pence per share to be paid before completion of the Acquisition; and

Resolution to commence paying dividends from completion - currently expected to pay a final dividend of 2.72 pence2 per Resolution Share in respect of the second half of 2009.

The Resolution Board believes that the terms of the Acquisition are fair to both sets of shareholders, as they deliver:

a substantial premium to Friends Provident Shareholders;

an attractive entry price for Resolution's first consolidation and restructuring project; and

a good platform for creation of shareholder value through Resolution's first project.

Resolution was listed on the Official List and admitted to trading on the main market of the London Stock Exchange in December 2008 with the objective of providing the public markets with a series of restructuring opportunities in the financial services industry in the UK and Western Europe. Resolution has undertaken to make acquisitions only where it considers them capable, in aggregate over a restructuring project, of generating returns consistent with a mid-teens percentage gross internal rate of return over the medium term3.

The Acquisition, which Resolution believes is consistent with its target returns, represents the start of its first project, namely the consolidation and restructuring of businesses in the Life and Asset Management Sectors. Resolution has developed a detailed strategy for sponsoring the consolidation and restructuring of the Life and Asset Management Sectors. Resolution and Friends Provident believe that consolidation is both desirable and inevitable given the fragmentation, complexity and low returns in these sectors.

In the view of the Resolution Board, Friends Provident brings to Resolution:

an attractive franchise which can benefit from consolidation;

an experienced management team;

efficient and scalable systems;

a strong capital position; and

a good fit with future possible acquisitions.

Resolution has the benefit of an experienced team which has supportive public market shareholders, strong relationships with the capital markets, and integration, in-force management and M&A skills focused on achieving these goals.

Resolution expects to follow the Acquisition with further transactions. The Resolution Board believes that this consolidation and restructuring will, over time, deliver significant value to Enlarged Group Shareholders, including from:

achieving scale in selected areas of new business, combined with the necessary financial discipline on the required returns and payback periods;

synergies from cost reductions and efficiency measures; and

capital and financial synergies.

At the end of the consolidation and restructuring phase, Resolution intends to have created an enlarged Life and Asset Management Group with a secure in-force portfolio which can provide a sustainable yield with a predictable duration and a scale new business platform which is capable of delivering attractive returns to capital providers.

Resolution does not expect to be the long term owner of the Life and Asset Management Group. It expects its current consolidation and restructuring project in the Life and Asset Management Sectors to last between two to four years. Upon completion of the project, Resolution expects to return value for the Enlarged Group Shareholders.

Basic Terms of the Acquisition

Under the Basic Terms of the Acquisition, which are set out in more detail in section 1 of this announcement, Friends Provident Shareholders will receive a mixture of cash and New Resolution Shares. Additionally Friends Provident Shareholders may elect to receive shares or additional cash, subject to the additional cash being proportionately reduced as necessary to ensure that the Maximum Cash Amount is not exceeded.

The Basic Terms of the Acquisition will provide Friends Provident Shareholders with:

a cash amount equal to the value of 0.9 of a Resolution Share as at close of trading on 7 August 2009, being 79.4 pence per share, for up to the first 2,500 Friends Provident Shares held by each holder (including those who hold their Friends Provident Shares through the Nominee Arrangement) on the Scheme Record Date (subject to the total amount of cash not exceeding the Maximum Cash Amount) (the "Cash Component"); and

0.9 of a New Resolution Share for each Friends Provident Share for the remainder of the holdings of each Friends Provident Shareholder, which (based on the closing price per Resolution Share of 88.25 pence on 7 August 2009) values Friends Provident Shares at the same price of 79.4 pence per share (the "Share Component").

The terms of the Acquisition value the entire issued share capital of Friends Provident at £1,858 million. The Maximum Cash Amount available under the Acquisition is £500 million, which represents approximately 27 per cent. of the total value of the Acquisition.

If Friends Provident Shareholders make a Share Election, they will receive 0.9 of a Resolution Share per Friends Provident Share they hold on the Scheme Record Date. If Friends Provident Shareholders make a Further Cash Election they will receive as much cash as is available on a pro rata basis after satisfying the Basic Terms. The aggregate amount of cash received will depend on other Friends Provident Shareholders making offsetting Share Elections and the amount of cash required to satisfy the Cash Component of the Basic Terms.

Premium value

The terms of the Acquisition represent:

a premium of 5.9 per cent. to the closing price of Friends Provident Shares on 10 August 2009 of 75 pence; and

a premium of 31.5 per cent. to the closing price of Friends Provident Shares on 10 July 2009 of 60.4 pence (10 July 2009 being the last business day before disclosure of a potential transaction).

Enlarged Group governance and management

Following Resolution's original approach, the Friends Provident Board expressed certain initial concerns over Resolution's structure and governance arrangements, particularly in relation to the suitability of Resolution Shares for Friends Provident's large retail shareholder base. Friends Provident has now had the opportunity to examine Resolution's business model and structure through engagement with Resolution and through discussion with, among others, the FSA and major shareholders of both companies. Friends Provident also appreciates Resolution's commitment in its IPO prospectus to seek to transfer to a primary listing upon completion of its first acquisition. Friends Provident has now concluded that Resolution's governance arrangements, business model and alignment with investors reflect and support its objective to create value for public market investors from the restructuring of financial services businesses.

The acquiring entity, Resolution Holdings (UK) Limited, will be renamed Friends Provident Holdings (UK) Limited on completion of the Acquisition.

The Resolution Board believes that it is important that the Friends Provident Holdings Board should retain a strong executive and non-executive team. The Friends Provident Holdings Board will comprise:

a majority of independent non-executive directors, including any non-executive directors drawn from the existing Friends Provident Board;

Trevor Matthews and Evelyn Bourke, continuing in their current roles as Chief Executive Officer and Chief Financial Officer of Friends Provident; and

Clive Cowdery and John Tiner, two Resolution Shareholder representatives, as additional non-executive directors.

It is not intended that there will be any changes to the membership of the with-profits committees of entities within the Friends Provident Group as a result of the Acquisition, nor is it intended that any changes to the Principles and Practices of Financial Management of Friends Provident's with-profits funds will be made.

In addition, Resolution intends to strengthen the Resolution Board with the appointment of further non-executive directors in due course. The Resolution Board is considering offering two seats on its Board to existing Friends Provident non-executive directors and is engaging in discussions on this topic with individual members of the Friends Provident Board.

In connection with its move to a primary listing, Resolution intends to maintain or implement the measures described in section 3 of the following announcement.

Unanimous Recommendation

The Friends Provident Directors, who have been so advised by Goldman Sachs International and J.P. Morgan Cazenove Limited, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the Friends Provident Directors, Goldman Sachs International and J.P. Morgan Cazenove Limited have taken into account the commercial assessments of the Friends Provident Directors.

Accordingly, the Friends Provident Directors intend unanimously to recommend that Friends Provident Shareholders vote in favour of the Acquisition and the relevant resolutions at the Court Meeting and the EGM.

Comments

Mike Biggs, Chairman of Resolution commented: "We are delighted to have reached agreement with the Board of Friends Provident. We are excited by the potential for our proposed restructuring of the UK Life Assurance and Asset Management Sector and believe the acquisition of Friends Provident is an excellent first step."

Sir Adrian Montague, Chairman of Friends Provident commented: "The Board of Friends Provident is pleased to have secured this attractive transaction for shareholders. The transaction offers shareholders the choice of an attractive premium on exit or the opportunity to be part of Resolution's first financial services restructuring project."

Trevor Matthews, Chief Executive Officer of Friends Provident commented: "The executive team and I are enthusiastic about the future with Resolution. We look forward to playing a leading role in industry consolidation and re-shaping the new business landscape."

1 Adjusted EEV as at 30 June 2009 is calculated as the EEV of £2,894 million as at 30 June 2009 as published in Friends Provident's interim results reduced by the net impact of the F&C Demerger (minus £158 million) and the interim dividend paid on 24 July 2009 (minus £61 million).

2 In setting its dividend policy, the Resolution Board is targeting an aggregate dividend of £90 million per annum over the Enlarged Group Shareholder base. The proposed dividend payment per share has been calculated on the basis that the maximum amount of cash in the offer (£500 million) is paid to Friends Provident Shareholders under the Scheme so that approximately 630 million Friends Provident Shares are exchanged for cash and the remaining approximately 1,710 million Friends Provident Shares currently in issue will be exchanged for approximately 1,539 million New Resolution Shares. There are currently 660 million Resolution Shares in issue. On this basis, the number of Resolution Shares in issue immediately following completion of the Acquisition is expected to be approximately 2,200 million.

3 The gross internal rate of return is the rate of interest such that the present value of all investor cash flows is zero. Investor cash flows are the net investor outflows and investor inflows. The investor outflows include the initial fund raising (including issue costs), future shareholder investments (for example, by way of rights issues or issue of shares as consideration for an acquisition); the investor inflows include all dividends and returns of capital made by the Company whether by cash or the distribution in specie of shares in acquired businesses to shareholders or otherwise.

This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including the Appendices). The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 to the following announcement and the terms and conditions to be set out in the Scheme Documentation when issued. Appendix 2 contains definitions of certain terms used in this summary and the following announcement. Appendix 3 contains the sources and bases of certain information used in this summary and in the following announcement. Please carefully read the Scheme Documentation in its entirety before making a decision with respect to the Acquisition.

Communications

Resolution and Friends Provident will host a presentation to investors and analysts at 9.30am on Tuesday 11 August 2009 at the London Stock Exchange. There will be a wire call at 7.30am on Tuesday 11 August 2009 for which the dial-in number is +44 (0) 20 3037 9157.

Contacts:
Resolution	Friends Provident
+44 (0) 1481 745 498 Mike Biggs +44 (0) 20 7016 9085 John Tiner, Steve Riley (Investors)	+44 (0) 845 641 7814 Sir Adrian Montague, Trevor Matthews, Nick Boakes (Press), Chris Ford (Investors)

Credit Suisse	Goldman Sachs International
+44 (0) 20 7888 8888 James Leigh-Pemberton, Zachary Brech	+44 (0) 20 7774 1000 Simon Dingemans, Paul Miller

Lazard +44 (0) 20 7187 2000 Will Samuel, Edmund Dilger	J.P. Morgan Cazenove Limited +44 (0) 20 7588 2828 Tim Wise, Conor Hillery

Temple Bar Advisory	Finsbury
+44 (0) 7795 425880 Alex Child-Villiers (Press)	+44 (0) 20 7251 3801 Roland Rudd, Rollo Head, Vanessa Neill (Press)

This announcement does not constitute or form part of any offer or invitation to sell or purchase any securities or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by the Scheme Documentation which will contain the full terms and conditions of the Acquisition, including details of how the Acquisition may be accepted. Please carefully read the Scheme Documentation in its entirety before making a decision with respect to the Acquisition.

Credit Suisse Securities (Europe) Limited ("Credit Suisse") and Lazard & Co., Limited ("Lazard"), which are authorised and regulated by the Financial Services Authority in the United Kingdom, are acting for Resolution and for no one else in connection with the Acquisition and will not be responsible to any person other than Resolution for providing the protections afforded to clients of Credit Suisse and Lazard, nor for providing advice in relation to the Acquisition, the content of this announcement or any matter referred to herein. Neither Credit Suisse nor Lazard nor any of their subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse or Lazard in connection with this announcement, any statement contained herein or otherwise.

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Resolution or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, shares or other securities in Resolution and Friends Provident, other than pursuant to the Acquisition, at any time prior to completion of the Acquisition becoming effective. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code and the rules of the London Stock Exchange. In addition, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Credit Suisse and Lazard and their respective affiliates will continue to act as exempt principal traders in Resolution and Friends Provident shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. To the extent required by the applicable law (including the Code), any information about such purchases will be disclosed to the Panel on Takeovers and Mergers and a Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.

Goldman Sachs International and J.P. Morgan Cazenove Limited are acting for Friends Provident and no one else in connection with the matters described in this announcement, and will not be responsible to anyone other than Friends Provident for providing the protections afforded to clients of Goldman Sachs International and J.P. Morgan Cazenove Limited or for providing advice in relation to the matters described in this announcement.

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Friends Provident or its nominee or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, shares or other securities in Resolution and Friends Provident, at any time prior to completion of the Acquisition becoming effective. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code and the rules of the London Stock Exchange. In addition, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Goldman Sachs International and J.P. Morgan Cazenove Limited and their respective affiliates will continue to act as exempt principal traders in Resolution and Friends Provident shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. To the extent required by the applicable law (including the Code), any information about such purchases will be disclosed to the Panel on Takeover and Mergers and a Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.

The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, this announcement is not for publication or distribution (directly or indirectly) to US persons or in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia).

The Acquisition will not be made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national securities exchange of any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Resolution and Friends Provident regard as unduly onerous (a "Restricted Jurisdiction") and will not be capable of acceptance by any such use, means or facility or from within any such Restricted Jurisdiction. Accordingly, unless otherwise determined by Resolution and Friends Provident, copies of this announcement and any documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Restricted Jurisdiction, as doing so may invalidate any purported acceptance of any offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other documentation relating to the Acquisition to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of any relevant jurisdiction.

This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of England.

The New Resolution Shares will not be and are not required to be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") in reliance on an exemption from registration provided by Section 3(a)(10) of that Act. No public offering of New Resolution Shares will be made in the United States. Furthermore, Resolution has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") pursuant to the exemption provided by Section 3(c)(7) thereof, and investors will not be entitled to the benefits of that Act. Accordingly, New Resolution Shares will be issued to, or for the account or benefit of, persons located within the United States and to, or for the account or benefit of, US Persons (as defined in Regulation S under the U.S. Securities Act) only if such persons have demonstrated that they are Qualified Purchasers (as defined in section 2(a)(51) of the US Investment Company Act).

In respect of persons located in the United States or who are US Persons (as defined in Regulation S under the U.S. Securities Act) that are not Qualified Purchasers, Resolution will reserve the right to have the New Resolution Shares to which such persons would otherwise be entitled sold in the market on their behalf, in which case they will receive a cash sum from the proceeds of such sale.

Forward-Looking Statements

This announcement contains "forward-looking statements" concerning Resolution and Friends Provident that are subject to risks and uncertainties. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Resolution's and Friends Provident's ability to control or estimate precisely, such as future market conditions, changes in regulatory environment and the behaviour of other market participants. Neither Resolution nor Friends Provident can give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Neither Resolution nor Friends Provident undertakes any obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Resolution, Friends Provident or any other person following the implementation of the Acquisition or otherwise.

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 or of Friends Provident, 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 any relevant 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 or Friends Provident, 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 or of Friends Provident by Resolution or Friends Provident, 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.

Publication on Resolution website

A copy of this announcement is and will be available free of charge, subject to certain restrictions relating to persons resident in restricted jurisdictions, for inspection on Resolution's website at www.resolution.gg.

11 August 2009

Resolution Launches its Life Assurance Consolidation Project with the Recommended Acquisition of Friends Provident

Summary

The key terms of the Acquisition include:

total consideration of £1,858 million (based on a Resolution Share price of 88.25 pence as at close of trading on 7 August 2009);

0.9 of a New Resolution Share per Friends Provident Share;

cash consideration for up to the first 2,500 shares held by each Friends Provident Shareholder at 79.4 pence per Friends Provident Share;

total cash consideration of up to £500 million at 79.4 pence per Friends Provident Share (including the cash consideration in respect of up to the first 2,500 shares);

total consideration representing 69 per cent. of adjusted EEV as at 30 June 20091;

transfer to a primary listing on the Official List of the UKLA at completion;

inclusion in FTSE index expected to follow completion;

Friends Provident interim dividend of 1.3 pence per share to be paid before completion of the Acquisition; and

Resolution to commence paying dividends from completion - currently expected to pay a final dividend of 2.72 pence2 per Resolution Share in respect of the second half of 2009.

The Resolution Board believes that the terms of the Acquisition are fair to both sets of shareholders, as they deliver:

a substantial premium to Friends Provident Shareholders;

an attractive entry price for Resolution's first consolidation and restructuring project; and

a good platform for creation of shareholder value through Resolution's first project.

The Acquisition, which Resolution believes is consistent with its target returns, represents the start of its first project, namely the consolidation and restructuring of the Life and Asset Management Sectors. Resolution has developed a detailed strategy for sponsoring the consolidation and restructuring of the Life and Asset Management Sectors. Resolution and Friends Provident believe that consolidation is both desirable and inevitable given the fragmentation, complexity and low returns in these sectors.

In the view of the Resolution Board, Friends Provident brings to Resolution:

an attractive franchise which can benefit from consolidation;

an experienced management team;

efficient and scalable systems;

a strong capital position; and

a good fit with future possible acquisitions.

achieving scale in selected areas of new business, combined with the necessary financial discipline on the required returns and payback periods;

synergies from cost reductions and efficiency measures; and

capital and financial synergies.

The Board of Resolution believes that following the Acquisition, Resolution will be well positioned to further its consolidation and restructuring project and create significant value for Enlarged Group Shareholders, consistent with target returns.

1. The Acquisition

Under the Basic Terms of the Acquisition, Friends Provident Shareholders will receive a mixture of cash and New Resolution Shares. Additionally, Friends Provident Shareholders may elect to receive all shares or additional cash, subject to the additional cash being proportionately reduced as necessary to ensure that the Maximum Cash Amount is not exceeded.

Basic Terms of the Acquisition

Under the Basic Terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to be set out in the Scheme Documentation, Friends Provident Shareholders will be entitled to receive:

the Cash Component

for up to the first 2,500 Friends Provident Shares held by each holder (including those who hold their Friends Provident Shares through the Nominee Arrangement) on the Scheme Record Date (the "Initial Shares")

cash equal to the value of 0.9 of a Resolution Share as at the close of trading on 7 August 2009, being 79.4 pence in cash per Friends Provident Share

and

the Share Component

for each other Friends Provident Share held on the Scheme Record Date

0.9 of a Resolution Share

Friends Provident Shareholders should note that 2,500 is a maximum figure and it is possible that the number of shares in respect of which each Friends Provident Shareholder is entitled to receive cash (the number of Initial Shares) will be decreased if the Maximum Cash Amount is not sufficient to allow every shareholder to receive cash in respect of the first 2,500 Friends Provident Shares held. The Maximum Cash Amount available to satisfy the aggregate of all cash entitlements under the Scheme is £500 million. If necessary (for example, due to changes in the number of holdings of Friends Provident Shares prior to the Scheme Record Date), the number of Initial Shares in respect of which each Friends Provident Shareholder is entitled to receive cash under the Basic Terms of the Scheme will be reduced from 2,500 to a lower whole number, such that the total amount of cash required to satisfy the Basic Terms of the Scheme does not in any case exceed the Maximum Cash Amount.

On the basis of the Friends Provident Share register as at 7 August 2009, the Maximum Cash Amount is sufficient to allow every shareholder to receive cash consideration in respect of the first 2,500 Friends Provident Shares held, and would then leave approximately £148 million in additional cash free for the Further Cash Election. However, there is no certainty as to the amount of cash consideration available to each Friends Provident Shareholder. The only floor on the number of Initial Shares to be acquired for cash is one Friends Provident Share per Friends Provident Shareholder, and, in addition, if the number of Initial Shares is reduced to one Friends Provident Share due to unforeseen numbers of additional Friends Provident Shareholders, the amount of cash payable on that Friends Provident Share would be equal to the Maximum Cash Amount divided by the number of Friends Provident Shareholders on the register at the Scheme Record Date.

However, if, for example, a number of Friends Provident Shareholders were to split their shareholdings (by partial sale of their investment or by transfer of part(s) of their investment to nominee(s)), the total number of shareholders on the Friends Provident share register would increase. If the total number of shareholders were to increase, the total amount of cash required to provide every shareholder with cash in respect of his first 2,500 shares would also increase. If the required amount were therefore to exceed the Maximum Cash Amount, the number of Initial Shares in respect of which each shareholder is entitled to receive cash under the Basic Terms would be reduced, as described above, to a level that permits the cash element of the Basic Terms to be satisfied by the Maximum Cash Amount.

Share Election

Friends Provident Shareholders may elect to receive Resolution Shares instead of the Cash Component in respect of some or all of their Initial Shares. Such Resolution Shares will be made available on the basis of:

for each Friends Provident Share held on the Scheme Record Date

0.9 of a Resolution Share

Further Cash Election

Friends Provident Shareholders are also entitled, subject to availability, to elect to receive cash in respect of all or part of their remaining holding of Friends Provident Shares, in respect of which such Friends Provident Shareholders would, absent such election, receive Resolution Shares as part of the Share Component, on the basis of:

for every Friends Provident Share held on the Scheme Record Date

79.4 pence in cash

However, the Maximum Cash Amount will not be varied as a result of Further Cash Elections made. The cash available for the Scheme (up to the Maximum Cash Amount) will first be applied in satisfying the Basic Terms of the Acquisition, taking into account the number of Friends Provident Shareholders on Friends Provident's share register (including, for the avoidance of doubt, those who hold their Friends Provident Shares through the Nominee Arrangement) as at the Scheme Record Date. To the extent that the Maximum Cash Amount has not been utilised in full in satisfying the Basic Terms of the Acquisition (including as a result of Friends Provident Shareholders making Share Elections), it will be used to satisfy Further Cash Elections made by Friends Provident Shareholders. If the Maximum Cash Amount is not sufficient to satisfy the Further Cash Election in full on this basis, entitlements under the Further Cash Election will be scaled down pro rata (in proportion to the total number of shares held by each shareholder).

If no Share Elections were made (such that all Friends Provident Shareholders receive cash in respect of the first 2,500 Friends Provident Shares held), and if all Friends Provident Shareholders elected for the maximum Further Cash Election, then (on the basis of the Friends Provident Share register (including, for the avoidance of doubt, those who hold their Friends Provident Shares through the Nominee Arrangement) as at 7 August 2009) the Resolution Board estimates that they would receive cash in respect of approximately 10 per cent. of Friends Provident Shares in excess of the first 2,500 shares held.

Any Friends Provident Shareholder who makes a Share Election will not also be allowed to make a Further Cash Election.

If elections are made by Friends Provident Shareholders such that the Maximum Cash Amount is not reached, the balance of that cash will be retained by Resolution.

Premium value

The terms of the Acquisition represent:

a premium of 5.9 per cent. to the closing price of Friends Provident Shares on 10 August 2009 of 75 pence; and

a premium of 31.5 per cent. to the closing price of Friends Provident Shares on 10 July 2009 of 60.4 pence (10 July 2009 being the last business day before disclosure of a potential transaction).

Implementation and conditionality

The Acquisition is expected to be implemented by means of a scheme of arrangement of Friends Provident under Part 26 of the Companies Act 2006 and will be conditional upon, amongst other things, the approval of Friends Provident Shareholders to the Scheme and the sanction of the Scheme by the Court. The Acquisition is also conditional on regulatory clearance from the FSA, and transfer of Resolution's existing secondary listing on the Official List of the UKLA to a primary listing.

Resolution Independent Advice

The number of Resolution Shares that will be issued under the terms of the Acquisition means that the Acquisition is classified as a 'reverse takeover' for Resolution for the purposes of the Code.

The Resolution Directors, who have been so advised by Credit Suisse and Lazard, consider the terms of the Acquisition to be fair and reasonable. In providing their advice, Credit Suisse and Lazard have taken into account the commercial assessments of the Resolution Directors.

2. Unanimous recommendation

Accordingly, the Friends Provident Directors intend unanimously to recommend that Friends Provident Shareholders vote in favour of the Scheme and the EGM Resolutions at the Court Meeting and the EGM.

All of the Friends Provident Directors who are also Friends Provident Shareholders have irrevocably undertaken to vote in favour of the Scheme and to make a Share Election in respect of their entire aggregate holding of 1,298,635 Friends Provident Shares.

3. Resolution's restructuring projects, new management structure and corporate governance

Resolution's restructuring projects

Resolution's first restructuring project is in the Life and Asset Management Sectors. As part of this project, Resolution expects over time to acquire a number of businesses that include life and/or asset management companies which are listed in, or have a significant part of their businesses in, the UK and Western Europe. These companies will be restructured, consolidated and/or broken up to create value in the relevant sectors.

In accordance with the objectives set out in the prospectus issued at the time of its initial public offering, Resolution may in due course wish to take advantage of restructuring opportunities outside of the Life and Asset Management Sectors. If the Resolution Board decides to undertake a new restructuring project before the end of this project, Resolution will seek the approval of its shareholders (measured by a simple majority of those voting). This approval vote would be in addition to any specific transaction-related vote required under the class tests required by the Listing Rules of the UK Listing Authority.

Management of the Friends Provident Holdings Group

The Acquisition vehicle, Resolution Holdings (UK) Limited, will be renamed Friends Provident Holdings (UK) Limited ("Friends Provident Holdings") on completion of the Acquisition.

The Resolution Board believes it is important that the Friends Provident Holdings Board should retain a strong executive and non-executive team. The Friends Provident Holdings Board will comprise:

a majority of independent non-executive directors, including any non-executive directors drawn from the existing Friends Provident Board;

Trevor Matthews and Evelyn Bourke, continuing in their current roles as Chief Executive Officer and Chief Financial Officer of Friends Provident; and

Clive Cowdery and John Tiner, two Resolution shareholder representatives, as additional non-executive directors.

It is not intended that there will be any changes to the membership of the with-profits committees of entities within the Friends Provident Group as a result of the Acquisition and nor is it intended that any changes to the Principles and Practices of Financial Management of Friends Provident's with-profits funds will be amended.

Corporate governance

Following Resolution's original approach, the Friends Provident Board expressed certain initial concerns over Resolution's structure and governance arrangements, particularly in relation to the suitability of Resolution shares for Friends Provident's large retail shareholder base. Friends Provident has now had the opportunity to examine Resolution's business model and structure through engagement with Resolution and through discussion with, among others, the FSA and major shareholders of both companies. Friends Provident also appreciates Resolution's commitment in its IPO prospectus to seek to transfer to a primary listing upon completion of its first acquisition. Friends Provident has now concluded that Resolution's governance arrangements, business model and alignment with investors reflect and support its objective to create value for public market investors from the restructuring of financial services businesses.

Resolution complies on a voluntary basis with the Combined Code (to the extent applicable) and with the Model Code in relation to directors' dealings and is subject to the Guernsey Code of Practice. The Resolution Board also has an audit committee and its directors retire by rotation.

In connection with its move to a primary listing, Resolution intends to maintain or implement the following measures:

Resolution Shareholders will be given the opportunity to vote on all new appointments to the Friends Provident Holdings Board at the following annual general meeting of Resolution. Friends Provident Holdings directors will retire by rotation in accordance with usual practice for a public company and Resolution Shareholders will vote on their re-election. Clive Cowdery and John Tiner will put themselves forward for annual re-election to their post as directors of Friends Provident Holdings.

Resolution will prepare an annual remuneration report that will cover both the remuneration of the Resolution Board and the remuneration of the Friends Provident Holdings Board, and there will be an annual advisory vote of the Enlarged Group Shareholders on that remuneration report.

Resolution will establish nomination and remuneration committees to consider the appointment of new non-executive directors and the remuneration of the Board of Resolution, consistent with the requirements that apply under the Combined Code.

Nominations to the Friends Provident Holdings Board will be considered by the Resolution Nominations Committee, which will include a non-executive director from the Friends Provident Holdings Board.

Clive Cowdery, John Tiner and other partners of ROL (as appropriate) will attend the annual general meeting of Resolution and will be available to answer shareholder questions at that meeting and at shareholder roadshows.

ROL will create a Life Consolidation Advisory Group which will ordinarily meet monthly to review acquisition opportunities in the Life and Asset Management Sectors, assess potential synergies, and discuss approach tactics for the duration of the Life and Asset Management Sectors consolidation and restructuring project. The Chief Executive Officer and Chief Financial Officer of Friends Provident Holdings will also be members of this Group.

Enlarged Group Shareholders' approval will be sought at the next annual general meeting of Resolution to amend the articles of Resolution in order to hold subsequent annual general meetings in London.

Resolution will comply with Combined Code and National Association of Pension Funds guidelines on the number of non-executive director roles at other FTSE 100 companies that the Resolution non-executive directors can take on.

In addition, Resolution intends to strengthen the Resolution Board with the appointment of further non-executive directors in due course. The Resolution Board is considering offering two seats on its Board to the existing Friends Provident non-executive directors and is engaging in discussions on this topic with individual members of the Friends Provident Board.

4. Primary listing, Listing Rules and the Takeover Code

The Acquisition will be conditional on the transfer of Resolution's existing secondary listing on the Official List to a full primary listing with effect from the completion of the Acquisition. On transfer to a primary listing, Resolution will be subject to the full provisions of the Listing Rules, including those relating to shareholder approval of Class 1 transactions and restrictions on related party transactions. The Takeover Code already applies to Resolution, and will continue to do so after transfer to primary listing. Resolution will also seek and expects inclusion in the relevant FTSE index following its transfer to a primary listing.

5. Intentions for Friends Provident and Friends Provident's management and employees

Resolution believes that the current Friends Provident management and employees are an important part of the successful implementation of its consolidation and restructuring strategy for the Life and Asset Management Sectors. If the Acquisition becomes or is declared unconditional in all respects, Resolution intends that the existing employment rights of all Friends Provident Group employees would continue to be safeguarded in accordance with statutory and contractual requirements.

6. Ongoing dividend policy

Resolution expects that returns for Enlarged Group Shareholders will derive primarily from capital appreciation of its ordinary shares and the returns of proceeds from disposals.

While this expectation has not changed, Resolution recognises that a large number of Friends Provident Shareholders value the dividend that has historically been paid by Friends Provident. Accordingly, Resolution has reviewed its previous policy not to pay dividends and intends to commence paying dividends following completion of the Acquisition.

Resolution currently expects to pay a final dividend of 2.72 pence per Resolution Share in respect of the second half of 2009, assuming completion of the Acquisition and that the financial performance of Friends Provident is in line with expectations. Thereafter, Resolution expects to pay a dividend of 4.08 pence per Resolution Share, representing an aggregate amount of approximately £90 million per annum, in respect of each subsequent year, subject to the acquired Friends Provident business being able to support this level of dividend. Resolution expects that one-third of this dividend will be paid as an interim dividend in respect of the first half of each year and two-thirds of this dividend will be paid as a final dividend in respect of the second half of each year. Resolution is not paying an interim dividend in respect of the first half of 2009. Resolution intends to review its dividend policy after its next acquisition and following subsequent acquisitions.2

Friends Provident has declared an interim dividend of 1.3 pence per Friends Provident Share in respect of 2009 which will be paid by Friends Provident prior to completion of the Acquisition.

7. Benefits for policyholders

Resolution and Friends Provident share a commitment to managing life funds in a way that treats customers fairly and delivers leading standards of service. Resolution will maintain a continued focus on its customers, developing and promoting products and services that meet the needs of customers, providing clear information and quality of service.

The positive disclosure and information initiatives introduced by Friends Provident will continue. These are designed to help policyholders make informed decisions about their policies.

8. Information on Resolution

Resolution is a Guernsey incorporated company whose shares are admitted to the Official List and to trading on the London Stock Exchange.

Resolution was established for the purposes of acquiring businesses in one or more of the life assurance, asset management, general insurance, banking and diversified general financial sectors in the UK and elsewhere in Western Europe over time. Resolution's objective is to provide the public markets with a series of restructuring opportunities in these sectors and its first project is a consolidation and restructuring project within the Life and Asset Management Sectors.

Resolution intends to take a disciplined financial approach to acquisitions and has undertaken only to make acquisitions where it considers them capable, in aggregate, of generating returns consistent with a mid-teens percentage gross internal rate of return over the medium term3 (calculated before any payment of the Value Share described below and any refinancing and/or re-rating by the market of its assets, but taking into account the funding structure used to make an acquisition).

Although Resolution anticipates that it will normally acquire full ownership of target businesses, it will also consider acquiring economic interests constituting less than full ownership where it considers that this is likely to give it sufficient influence to enable it to implement its strategic plans. Resolution does not expect to be the long term owner of the companies and businesses that it acquires. It generally expects its consolidation and restructuring projects to last for between two to four years and its ownership of companies and businesses is intended to be limited to the duration of the project of which they form a part. Companies and businesses within a single sector will generally be acquired within the same restructuring group, although there are limited circumstances in which this may not be the case.

Upon completion of a restructuring project, Resolution would normally expect to return proceeds of a material amount arising from disposals to shareholders, in a manner that is as fiscally efficient as is practicable, but subject to prevailing circumstances at the time. Resolution intends to return any cash received at the end of a restructuring project to shareholders (to the extent possible in accordance with applicable law), except where a shareholder vote has approved such proceeds being retained for reinvestment.

Resolution has outsourced most of its operating functions, including the identification and assessment of acquisition opportunities and the design and execution of the restructuring and disposal process for acquired businesses, to ROL, an FSA authorised UK limited liability partnership, ultimately owned by certain individuals including Clive Cowdrey and John Tiner (the "Members"). The partners of ROL are all FSA authorised and the relevant partners propose to become approved persons (performing "Significant Influence" or "Director" Functions) for FSA purposes in connection with their oversight activities for Resolution.

Resolution has agreed that Resolution Capital Guernsey LP ("RCAP") (an entity ultimately owned by the Members and other members of the ROL team) will receive a "Value Share" of 10 per cent. of the added value created by each restructuring project above an agreed return. The Value Share will only be paid to RCAP in respect of the "added value" realised from a restructuring project once the accumulated value of Resolution's "deployed equity capital" contributed to the restructuring project, together with an amount equal to the "agreed return" on the deployed equity capital, has been returned to Resolution. The "agreed return" is currently a compounded annualised return on deployed equity capital, calculated on the basis of the annualised gross redemption yield on three-month UK gilts, updated every three months.

The Members of ROL recognise that the three month risk free rate is potentially volatile and have informed Resolution that they would like to discuss moving to a different risk free rate which better reflects the duration of Resolution's restructuring projects and is expected to be more stable. Any such change would be included in Resolution's prospectus to be published in connection with the Acquisition.

9. Information on Friends Provident

Friends Provident is the holding company of a leading UK financial services group and a member of the FTSE 100 Index. Founded in 1832, Friends Provident has two core businesses:

the UK life and pensions business has approximately 2.5 million customers, and markets a comprehensive range of protection, pensions and investment products for individual customers and corporate clients throughout the UK; and

the international life and pensions business operates in Europe, Asia and the Middle East, and includes the Isle of Man-based Friends Provident International and the Luxembourg-based Lombard.

The table below sets out certain selected financial information for the periods shown, prepared in accordance with IFRS. The data has been extracted without material adjustment or calculated from the financial information set out in Friends Provident's annual report for the year ended 31 December 2008 and its unaudited half-yearly report for the six months ended 30 June 2009. The summary below is intended to be indicative only and investors should read those documents in full and should not rely solely on this summary.

	For the half year ended 30 June		For the year ended 31 December
	(unaudited)		(audited)
	2009	2008	2008	2007	2006
Group IFRS underlying profit before tax (£ million)	38	13	(190)	(46)	400
Group IFRS profit before tax from continuing operations (£ million)	(102)	(221)	(871)	(113)	491
IFRS underlying earnings per share (pence)	0.3	1.2	(5.9)	(1.4)	17.9
IFRS basic earnings per share from continuing operations (pence)	(4.2)	(2.6)	(23.3)	(5.0)	13.1
Dividend per share (pence)	1.3	1.3 (interim)	3.9(1)	8.00	7.85
Total assets (£ million)	53,952	57,044	56,395	60,201	54,489
Equity attributable to ordinary shareholders (£ million)	2,298	2,843	2,364	2,952	2,807
EEV underlying profit before tax (£million)	131	211	420	16	509
IGD surplus resources (£billion)	0.9(2)	1.0	0.85	1.3	1.0
(1) Final dividend of 2.6p paid by Friends Provident on 24 July 2009 following re-organisation. (2) Estimated as at 31 July 2009.

UK life and pensions business

The UK life and pensions business is one of the top ten companies for attracting new business in the UK based on new business sales on an APE basis in 2008, offering a diverse range of protection and pension products for individual customers and corporate clients. The UK business also has significant additional distribution alliances with banks, building societies, retailers and intermediary groups, providing it with a diversified source of intermediated business.

The UK life and pensions business's core strategic markets are corporate pensions and individual protection, but the business also has a presence in the investments and group protection markets.

International life and pensions business

The international life and pensions business operates worldwide with specific emphasis on four key regions: Asia, the Middle East, UK and Continental Europe. The business offers savings, investment and protection products and estate planning solutions. The international business consists of two operating companies: Friends Provident International and Lombard.

From its base in the Isle of Man, Friends Provident International operates in all the four key regions of the UK, Europe, Asia and the Middle East, with a product mix that ranges from regular savings and protection business to investment contracts, including highly personalised portfolio bonds. Distribution partners are primarily IFAs. Friends Provident International has also actively developed distribution relationships with a number of institutional partners.

Friends Provident acquired Lombard in 2005. Lombard focuses on the provision of tailor-made financial and estate planning solutions for high net worth individuals ("HNWIs") and ultra HNWIs. Lombard operates primarily across eight EU member states, while continuing to exploit opportunities in other regions.

Other businesses

The Friends Provident Group owns two UK financial intermediary businesses.

Sesame Group Limited ("Sesame") is one of the largest providers of support services to 7,500 financial advisers across the UK including regulatory compliance, training, research and technology. Sesame provides financial advice and distributes a wide range of investment, protection, mortgage and general insurance products.

Pantheon Financial Limited is a Leeds based IFA with 32 advisers specialising in the high net worth and ultra high net worth markets.

These businesses build on Friends Provident Group's strategy to strengthen and develop relationships with the distribution community to improve insight into distributor and consumer needs, as well as to capture value from the distribution sector, by investing in intermediaries with growth prospects and attractive investment returns.

Friends Provident Group structure

The demerger of F&C caused the recognition of a realised loss on the Friends Provident Group's investment in F&C in the 2008 results of Friends Provident. Friends Provident, therefore, had insufficient distributable reserves from which to pay the 2008 final dividend of 2.6 pence per share. As a consequence, Friends Provident implemented a group re-organisation involving the imposition of a new holding company (Friends Provident Group plc) in order to create sufficient distributable reserves to permit payment of dividends (including a 2.6p interim dividend declared in lieu of the unpaid 2.6p final dividend for 2008) on an ongoing basis in line with Friends Provident's dividend policy. The re-organisation became effective on 15 June 2009, and on 6 July 2009 Friends Provident Group plc was substituted in place of Friends Provident plc as the issuer of Friends Provident's listed debt.

Demerger of F&C

A strategic review completed during 2008 concluded that the Friends Provident Group's 52% stake in F&C was no longer core to Friends Provident's strategy. After considering a number of options, the Friends Provident board decided that F&C should be demerged from the Friends Provident Group via a return of capital to Friends Provident Shareholders (the "Demerger"). Under the terms of the Demerger, Friends Provident Shareholders holding 2,500 shares of fewer in Friends Provident Group plc (and who would therefore have received 250 shares in F&C or fewer) had the shares in F&C to which they were entitled sold on their behalf in the market and received a cash sum in lieu of those shares from the proceeds of the sale. The demerger became effective on 3 July 2009. Friends Provident retained shares representing approximately 5 per cent. of the issued share capital of F&C. These shares were sold in the market and the proceeds retained to meet the costs of the reorganisation of the group structure and the Demerger.

EEV supplementary reporting

Resolution will review the methodology and assumptions used by Friends Provident for its EEV supplementary reporting following completion of the acquisition. Resolution expects that any changes resulting from this review will be reflected in Resolution's full-year results for 2009.

10. Structure and conditionality of the Acquisition

It is intended that the Acquisition will be implemented by way of a court-approved scheme of arrangement of Friends Provident under Part 26 of the 2006 Act. The procedure involves an application by Friends Provident to the Court to sanction the Scheme and to confirm the cancellation of all of the Scheme Shares, in consideration for which Scheme Shareholders will receive consideration in accordance with the terms of the Acquisition and those Scheme Shareholders' elections. It is also intended as part of the Scheme to implement the Reduction of Capital.

To become effective, the Scheme requires, amongst other things, the approval of a majority in number of the Scheme Shareholders present and voting in person or by proxy at the Court Meeting, representing not less than 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders, together with the sanction of the Court and the passing of the EGM Resolutions necessary to implement the Scheme at the EGM. Following the Meetings, the Scheme must be sanctioned and the Reduction of Capital confirmed by the Court, and will only become effective on delivery to the Registrar of Companies of a copy of the Scheme Court Order and a copy of the Reduction Court Order and, in the case of the Reduction Court Order, it being registered by the Registrar of Companies together with the minute of the Reduction of Capital attached to it. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Meetings.

Under the Scheme, each Scheme Share will be cancelled and new Friends Provident Shares will be issued fully paid to Resolution Holdings (UK) Limited. In consideration for the cancellation of their Scheme Shares, Scheme Shareholders will receive consideration under the terms of the Acquisition as outlined above.

The Acquisition will be made on the terms and subject to the conditions set out in this announcement and to be set out in the Scheme Document, including the obtaining of relevant regulatory approvals and the sanction of the Scheme by the Court. The Scheme Document will include full details of the Scheme, together with notices of the Meetings and the expected timetable. The Scheme Documentation will be dispatched to Friends Provident Shareholders and, for information only, to holders of options granted under the Friends Provident Share Schemes, in due course.

11. Friends Provident Share Schemes

The Acquisition will extend to any Friends Provident Shares unconditionally allotted or issued and fully paid prior to the Scheme Record Date pursuant to the exercise of options under any of the Friends Provident Share Schemes or as a result of vesting pursuant to the Friends Provident Share Schemes.

Participants in the Friends Provident Share Schemes will be written to separately and appropriate proposals will be made to such participants in due course.

12. Listed debt

Friends Provident will appoint an independent investment bank to determine what amendments (if any) are required to be made to the Alternative Coupon Satisfaction Mechanism under the STICS as a result of the Acquisition. Save for the aforementioned, the obligations of Friends Provident as issuer and FPLP as the guarantor of the STICS are unaffected by the Acquisition.

No changes will be made to the Lower Tier 2 Debt as a result of the Acquisition and the obligations of Friends Provident as issuer and FPLP as the guarantor of the Lower Tier 2 Debt are unaffected by the Acquisition.

13. Financing the Acquisition

The Cash Component of the Acquisition will be funded from Resolution's existing cash resources. Credit Suisse and Lazard are satisfied that sufficient resources are available to Resolution Holdings (UK) Limited to satisfy the Cash Component in full in accordance with the terms of the Acquisition.

14. Implementation Agreement

Resolution and Friends Provident have entered into the Implementation Agreement setting out, amongst other things, various matters in relation to the implementation of the Acquisition including an undertaking from Friends Provident not, directly or indirectly, to solicit, initiate, encourage or otherwise seek to procure any competing proposal to the Acquisition. In addition, Friends Provident has agreed to notify Resolution promptly of any approach made to Friends Provident in relation to a competing proposal.

Resolution also has the right, upon Friends Provident receiving details of the price and the terms and conditions of any such competing proposal or proposed competing proposal, to match or better the value implied by that competing proposal within three Business Days of being advised of such proposal. If Resolution announces a revised offer that provides equal or better value than such competing proposal within such period, the Friends Provident Board has agreed that the revised offer will be the subject of a unanimous recommendation by the Friends Provident Board.

Further details of the Implementation Agreement will be set out in the Scheme Document.

15. Disclosure of interests in Friends Provident

Other than for the purposes of implementing the Acquisition, as at the date of this announcement, neither Resolution, nor Resolution Holdings (UK) Limited, nor any of the directors of those companies, nor, so far as neither of those companies is aware, any person acting in concert (within the meaning of the Code) with those companies owns or controls any Friends Provident Shares or any securities convertible or exchangeable into Friends Provident Shares (including pursuant to any long exposure, whether conditional or absolute, to changes in the prices of securities) or any rights to subscribe for or purchase the same, or holds any options (including traded options) in respect of, or has any option to acquire, any Friends Provident Shares or has entered into any derivatives referenced to Friends Provident Shares ("Relevant Friends Provident Shares") which remain outstanding, nor does any such person have any arrangement in relation to Relevant Friends Provident Shares.

An "arrangement" for these purposes also includes any indemnity or option arrangement, or any agreement or understanding, formal or informal, of whatever nature, relating to Relevant Friends Provident Shares which may be an inducement to deal or refrain from dealing in such securities.

16. Non-UK Friends Provident Shareholders

The distribution of this announcement to, and the availability of the Acquisition to, persons who are not resident in the United Kingdom may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves of and observe any applicable legal or regulatory requirements of their jurisdiction. Further details in relation to overseas Friends Provident Shareholders will be contained in the Scheme Document.

In particular, the New Resolution Shares will not be and are not required to be registered under the U.S. Securities Act in reliance on an exemption from registration provided by Section 3(a)(10) of that Act. No public offering of Resolution securities will be made in the United States. Furthermore, Resolution has not been and will not be registered under the US Investment Company Act pursuant to the exemption provided by Section 3(c)(7) thereof, and investors will not be entitled to the benefits of that Act. Accordingly, the New Resolution Shares will be issued to, or for the account or benefit of, persons located within the United States and to, or for the account or benefit of, US Persons (as defined in Regulation S under the Securities Act) only if such persons have demonstrated that they are Qualified Purchasers (as defined in section 2(a)(51) of the US Investment Company Act).

17. Ability to implement by takeover offer; compulsory acquisition

Resolution reserves the right, with the consent of the Panel, to elect to implement the Acquisition by making a takeover offer for the entire issued and to be issued share capital of Friends Provident. If Resolution elects to implement the Acquisition by means of a takeover offer, that offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to any appropriate amendments to reflect that new structure, which may include changing the structure of entitlements to cash and New Resolution Shares under the terms of the Acquisition.

Any such takeover will, with the consent of the Panel, be subject to a 90 per cent. acceptance condition or such lesser percentage, being more than 50 per cent., as Resolution may decide.

Furthermore, in those circumstances, if sufficient acceptances of such offer are received and/or sufficient Friends Provident Shares are otherwise acquired, it is the intention of Resolution to apply the provisions of sections 979 to 982 (inclusive) of the 2006 Act to acquire compulsorily any outstanding Friends Provident Shares to which such offer relates.

18. Delisting and cancellation of trading

Prior to the Scheme becoming effective, Friends Provident will make an application to the London Stock Exchange to cancel trading in the Friends Provident Shares on its market for listed securities and to the UKLA to cancel the listing of the Friends Provident Shares from the Official List on the effective date of the Scheme.

If the Acquisition were implemented by way of takeover offer instead of the Scheme and Resolution Holdings (UK) Limited receives acceptances of the Acquisition which would result in Resolution Holdings (UK) Limited and/or any other members of the Resolution Group holding Friends Provident Shares carrying in aggregate more than 75 per cent. of the total number of Friends Provident Shares, Resolution and/or Friends Provident would intend to take the same steps. Such cancellation, delisting and re-registration would significantly reduce the liquidity and marketability of any Friends Provident Shares that are not assented to that takeover offer.

19. General

This announcement does not constitute an offer to purchase or an invitation to sell any Friends Provident Shares and any response to the Acquisition should be made only on the basis of the information contained in the Scheme Document. The Scheme Document will be despatched (other than to Restricted Overseas Persons) and the Prospectus will be published within 28 days of the date of this announcement (unless agreed otherwise with the Panel).

The Acquisition will be governed by English law and will be subject to the jurisdiction of the English courts. The Acquisition will be subject to the applicable requirements of the Code.

A copy of this announcement is and will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Resolution's website at www.resolution.gg during the course of the Acquisition.

Appendix 2 contains definitions of certain terms used in this announcement. Details of the sources and bases of certain information set out in this announcement are included in Appendix 4.

2 In setting its dividend policy, the Resolution Board is targeting an aggregate dividend of £90 million per annum over the Enlarged Group Shareholder base. The proposed dividend payment per share has been calculated on the basis that the maximum amount of cash in the offer (£500 million) is paid to Friends Provident Shareholders under the Scheme so that approximately 630 million Friends Provident Shares are exchanged for cash and the remaining approximately 1,710 million Friends Provident Shares currently in issue will be exchanged for approximately 1,539 million Resolution Shares. There are currently 660 million Resolution Shares in issue. On this basis, the number of Resolution Shares in issue immediately following completion of the Acquisition is expected to be approximately 2,200 million.

Communications

Contacts:
Resolution	Friends Provident
+44 (0) 1481 745 498 Mike Biggs +44 (0) 20 7016 9085 John Tiner, Steve Riley (Investors)	+44 (0) 845 641 7814 Sir Adrian Montague, Trevor Matthews, Nick Boakes (Press), Chris Ford (Investors)

Credit Suisse	Goldman Sachs International
+44 (0) 20 7888 8888 James Leigh-Pemberton, Zachary Brech	+44 (0) 20 7774 1000 Simon Dingemans, Paul Miller

Lazard +44 (0) 20 7187 2000 Will Samuel, Edmund Dilger	J.P. Morgan Cazenove Limited +44 (0) 20 7588 2828 Tim Wise, Conor Hillery

Temple Bar Advisory	Finsbury
+44 (0) 7795 425880 Alex Child-Villiers (Press)	+44 (0) 20 7251 3801 Roland Rudd, Rollo Head, Vanessa Neill (Press)

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Friends Provident or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, shares or other securities in Resolution and Friends Provident, at any time prior to completion of the Acquisition becoming effective. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code and the rules of the London Stock Exchange. In addition, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Goldman Sachs International and J.P. Morgan Cazenove Limited and their respective affiliates will continue to act as exempt principal traders in Resolution and Friends Provident shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. To the extent required by the applicable law (including the Code), any information about such purchases will be disclosed to the Panel on Takeovers and Mergers and a Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.

The Acquisition will not be made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national securities exchange of any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Resolution and Friends Provident regards as unduly onerous (a "Restricted Jurisdiction") and will not be capable of acceptance by any such use, means or facility or from within any such Restricted Jurisdiction. Accordingly, unless otherwise determined by Resolution and Friends Provident, copies of this announcement and any documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Restricted Jurisdiction, as doing so may invalidate any purported acceptance of any offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other documentation relating to the Acquisition to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of any relevant jurisdiction.

Forward-Looking Statements

Dealing Disclosure Requirements

Publication on Resolution website

APPENDIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE ACQUISITION

1. Conditions of the Acquisition

1.1 The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective by no later than 28 February 2010, or such later date (if any) as Resolution and Friends Provident may agree and (if required) the Panel and the Court may allow.

1.2 The Scheme will be conditional upon:

(A) its approval by a majority in number representing not less than three-fourths in value of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting;

(B) all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the EGM of Friends Provident or at any adjournment of the EGM (including the EGM Resolutions); and

(C) the sanction of the Scheme with or without modification (but subject to any such modification being acceptable to Resolution and Friends Provident), the confirmation of the Reduction of Capital by the Court and:

(i) the delivery of a copy of the Scheme Court Order and the Reduction Court Order and of the minute confirming the Reduction of Capital to the Registrar of Companies in England and Wales; and

(ii) the registration of the Reduction Court Order by the Registrar of Companies in England and Wales.

1.3 In addition, Resolution and Friends Provident have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

(A) the admission to the Official List of the New Resolution Shares to be issued in connection with the Acquisition becoming effective in accordance with the Listing Rules and the admission of such shares to trading becoming effective in accordance with the Admission and Disclosure Standards of the London Stock Exchange or if Resolution and Friends Provident so determine (and subject to the consent of the Panel) the UKLA agreeing to admit such shares to the Official List and the London Stock Exchange agreeing to admit such shares to trading subject only to (i) the allotment of such shares and/or (ii) the Acquisition becoming or being declared unconditional in all respects;

(B) the transfer of Resolution’s existing secondary listing on the Official List to a primary listing on the Official List becoming effective in accordance with the Listing Rules or, if Resolution and Friends Provident so determine (and subject to the consent of the Panel) the UKLA agreeing to the transfer of Resolution's listing to a primary listing subject only to the Acquisition becoming or being declared unconditional in all respects;

(i) the FSA having approved, in terms reasonably satisfactory to Resolution and to Friends Provident, the acquisition by Resolution Holdings (UK) Limited, and each parent undertaking of Resolution Holdings (UK) Limited, of control over each UK authorised person in the Wider Friends Provident Group within the meaning of Part XII of the Financial Services and Markets Act 2000 (“FSMA”) read with (if applicable) article 4 of the Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009, which would take place as a result of the Acquisition or its implementation;

(ii) the FSA being treated, under section 189(6) of FSMA, as having approved the acquisition by Resolution Holdings (UK) Limited, and each parent undertaking of Resolution Holdings (UK) Limited, of control over each UK authorised person in the Wider Friends Provident Group, such approval remaining effective at the time when any other Condition remains to be satisfied.

For the purposes of this Condition, “control” shall have the meaning given to it in Part XII of FSMA;

(D) each clearance or consent of, filing with, or notice to, any Third Party that is reasonably considered by Resolution and Friends Provident to be necessary or appropriate in connection with the Acquisition or its implementation, including the acquisition of any shares or securities in, or control of, any member of the Wider Friends Provident Group by any member of the Wider Resolution Group, in any country, territory or jurisdiction in which a member of either the Wider Resolution Group or the Wider Friends Provident Group is established or conducts business, having been granted, filed or delivered (as appropriate), in each case in terms reasonably satisfactory to Resolution and to Friends Provident;

(E) no order or judgment of any court or governmental, statutory or regulatory body having been issued or made prior to completion, and no legal or regulatory requirements remaining to be satisfied, other than the obtaining of any non-mandatory or post-completion merger control consent, which has the effect of making unlawful or otherwise prohibiting the purchase of Friends Provident by Resolution;

(F) save as fairly disclosed in Friends Provident’s annual report and accounts for the year ended 31 December 2008 or as otherwise publicly announced by Friends Provident prior to 11 August 2009 or as fairly disclosed in writing by Friends Provident prior to 11 August 2009, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Friends Provident Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Acquisition or the proposed acquisition of any shares or other securities in Friends Provident or because of a change in the control or management of Friends Provident or otherwise, could or might result in to an extent which is material in the context of the Wider Friends Provident Group as a whole:

(i) any moneys borrowed by or any other indebtedness (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or modified or affected or any onerous obligation or liability arising or any action being taken or arising thereunder;

(iii) any assets or interests of any such member being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than, in any such case, in the ordinary course of business;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member;

(v) the rights, liabilities, obligations or interests of any such member in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi) the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected;

(vii) any such member ceasing to be able to carry on business under any name under which it presently does so; or

(viii) the creation of any liability, actual or contingent, by any such member other than in the ordinary course,

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Friends Provident Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would be reasonably likely to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this Condition;

(G) save as fairly disclosed in Friends Provident’s annual report and accounts for the year ended 31 December 2008 or as otherwise publicly announced by Friends Provident prior to 11 August 2009 or as fairly disclosed in writing by Friends Provident to Resolution prior to 11 August 2009, no Third Party having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, or having taken any other steps which would or might reasonably be expected to:

(i) require, prevent or delay the divestiture, or materially alter the terms envisaged for any proposed divestiture by any member of the Wider Resolution Group or any member of the Wider Friends Provident Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own or control any of their respective assets or properties or any part thereof which, in any such case, is material in the context of the Wider Resolution Group or the Wider Friends Provident Group in either case taken as a whole;

(ii) require, prevent or delay the divestiture by any member of the Wider Resolution Group of any shares or other securities in Friends Provident;

(iii) impose any limitation on, or result in a delay in, the ability of any member of the Wider Resolution Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider Friends Provident Group or the Wider Resolution Group or to exercise management control over any such member;

(iv) otherwise adversely affect the business, assets, profits or prospects of any member of the Wider Resolution Group or of any member of the Wider Friends Provident Group in a manner which is adverse to and material in the context of the Resolution Group or the Friends Provident Group in either case taken as a whole;

(v) make the Acquisition or its implementation or the acquisition or proposed acquisition by Resolution or any member of the Wider Resolution Group of any shares or other securities in, or control of Friends Provident void, illegal, and/or unenforceable under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise materially interfere with the same, or impose additional material adverse conditions or obligations with respect thereto, or otherwise challenge or interfere therewith;

(vi) require any member of the Wider Resolution Group or the Wider Friends Provident Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider Friends Provident Group or the Wider Resolution Group owned by any third party;

(vii) impose any material limitation on the ability of any member of the Wider Friends Provident Group to co-ordinate its business, or any part of it, with the businesses of any other member of the Wider Friends Provident Group which is adverse to and material in the context of the group concerned taken as a whole; or

(viii) result in any member of the Wider Friends Provident Group ceasing to be able to carry on business under any name under which it presently does so to an extent which is materially adverse in the context of the Wider Friends Provident Group taken as a whole,

and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any relevant jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Friends Provident Shares having expired, lapsed or been terminated;

(H) all statutory and regulatory obligations in each relevant jurisdiction having been complied with in connection with the Acquisition and its implementation, and all consents, licenses, confirmations, clearances and permissions or approvals from any person with whom any member of the Wider Friends Provident Group has entered into contractual arrangements that are required in connection with, or as a consequence of, the Acquisition or its implementation, the absence of which is considered by Resolution to be capable of having a material adverse effect on the business of the Friends Provident Group having been granted in terms satisfactory to Resolution;

(I) save as fairly disclosed in Friends Provident’s annual report and accounts for the year ended 31 December 2008 or as otherwise publicly announced by Friends Provident in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules prior to 11 August 2009 or as fairly disclosed in writing by Friends Provident to Resolution prior to 11 August 2009, no member of the Wider Friends Provident Group having, since 31 December 2008:

(i) save as between Friends Provident and wholly-owned subsidiaries of Friends Provident or for Friends Provident Shares issued pursuant to the exercise of options granted under the Friends Provident Share Option Schemes, issued, authorised or proposed the issue of additional shares of any class;

(ii) save as between Friends Provident and wholly-owned subsidiaries of Friends Provident or for the grant of options under the Friends Provident Share Option Schemes, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;

(iii) other than to another member of the Friends Provident Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iv) save for intra-Friends Provident Group transactions and the Demerger, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;

(v) save for intra-Friends Provident Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital and except for the Demerger;

(vi) issued, authorised or proposed the issue of any debentures or (save for intra-Friends Provident Group transactions), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability;

(vii) save for intra-Friends Provident Group transactions, purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(viii) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business or entered into or changed the terms of any contract with any director or senior executive, in any case to an extent which is materially adverse in the context of the Wider Friends Provident Group taken as a whole;

(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any material contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be materially restrictive on the businesses of any member of the Wider Friends Provident Group or the Wider Resolution Group or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business and which is material in the context of the Wider Friends Provident Group taken as a whole;

(x) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xi) entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the Wider Friends Provident Group or the Wider Resolution Group other than to a nature and extent which is normal in the context of the business concerned;

(xii) other than in respect of intra-Friends Provident Group capital contributions or capitalisations, waived or compromised any claim otherwise than in the ordinary course of business which is material in the context of the Wider Friends Provident Group taken as a whole;

(xiii) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any acquisition (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition;

(xiv) made or agreed or consented to any change to:

(a) the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider Friends Provident Group for its directors, employees or their dependents;

(b) the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;

(c) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(d) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made; or

(xv) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider Friends Provident Group;

(J) except as disclosed in the accounts for the year then ended, or publicly announced in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules by Friends Provident prior to 11 August 2009 or fairly disclosed by Friends Provident or where not material in the context of the Wider Friends Provident Group taken as a whole, since 31 December 2008:

(i) no material adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects of any member of the Wider Friends Provident Group;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Friends Provident Group is or is likely to become a party (whether as a plaintiff, defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the Wider Friends Provident Group having been instituted announced or threatened by or against or remaining outstanding in respect of any member of the Wider Friends Provident Group which in any such case might reasonably be expected to have a material adverse effect on the Wider Friends Provident Group;

(iii) no contingent or other liability having arisen or become apparent to Resolution which would be reasonably likely to adversely affect any member of the Wider Friends Provident Group to an extent which is material in the context of the Wider Friends Provident Group taken as a whole; and

(iv) no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Friends Provident Group which is necessary for the proper carrying on of its business and which is material in the context of the Wider Friends Provident Group taken as a whole;

(K) save as fairly disclosed in Friends Provident’s annual report and accounts for the year ended 31 December 2008 or as otherwise publicly announced in accordance with the Listing Rules by Friends Provident prior to 11 August 2009 or as otherwise fairly disclosed in writing by Friends Provident prior to that date, Resolution not having discovered:

(i) that any financial, business or other information concerning the Wider Friends Provident Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider Friends Provident Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading, which in any case is material in the context of the Wider Friends Provident Group taken as a whole;

(ii) that any member of the Wider Friends Provident Group, or any partnership, company or other entity in which any member of the Wider Friends Provident Group has a significant economic interest and which is not a subsidiary undertaking of Friends Provident is subject to any liability (contingent or otherwise) which is not disclosed in the annual report and accounts of Friends Provident, for the year ended 31 December 2008 and which in any case is material in the context of the Wider Friends Provident Group taken as a whole; or

(iii) any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider Friends Provident Group and which is material in the context of the Wider Friends Provident Group taken as a whole; and

(L) Resolution not having discovered that:

(i) any past or present member of the Wider Friends Provident Group has failed to comply with any and/or all applicable legislation or regulation, of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of any member of the Wider Friends Provident Group and which is material in the context of the Wider Friends Provident Group taken as a whole; or

(ii) there is, or is likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the Wider Friends Provident Group to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider Friends Provident Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction and which is material in the context of the Wider Friends Provident Group taken as a whole.

1.4 Resolution reserves the right to waive, in whole or in part, all or any of the Conditions set out in paragraphs 1.3(E) to 1.3(L) (inclusive) above. Resolution shall be under no obligation to waive or treat as fulfilled any of the Conditions set out in paragraphs 1.3(E) to 1.3(L) (inclusive) above by a date earlier than the date specified in the Condition set out in paragraph 1.1 for the fulfilment thereof, notwithstanding that others of the Conditions may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

1.5 If Resolution is required by the Panel to make an offer for Friends Provident Shares under the provisions of Rule 9 of the Code, Resolution may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

1.6 Resolution reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of a takeover offer (as defined in Part 28 of the 2006 Act) as it may determine in its absolute discretion. In such event, such offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Acquisition, which may include changing the structure of entitlements to cash and New Resolution Shares under the terms of the Acquisition and (without limitation and subject to the consent of the Panel) an acceptance condition set at 90 per cent. (or such lesser percentage, being more than 50 per cent., as Resolution may decide): (i) in nominal value of the shares to which such offer relates; (ii) of the voting rights attached to those shares; and (iii) of the voting rights normally exercisable at a general meeting of Friends Provident, including, for this purpose, any such voting rights attaching to Friends Provident Shares that are unconditionally allotted or issued before the takeover offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.

1.7 The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

1.8 This Acquisition will be governed by English law and be subject to the jurisdiction of the English courts and to the conditions set out below and in the formal Scheme Documentation. The Acquisition will comply with the applicable rules and regulations of the Financial Services Authority and the London Stock Exchange and the Code.

2. Certain further terms of the Acquisition

2.1 Fractions of New Resolution Shares will not be allotted or issued to persons accepting the Acquisition. Fractional entitlements to New Resolution Shares will be aggregated and sold in the market and the net proceeds of sale distributed pro rata to persons entitled thereto. However, individual entitlements to amounts of less than £5 will not be paid to persons accepting the Acquisition but will be retained for the benefit of Resolution.

2.2 The Acquisition will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of any Restricted Jurisdiction and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

2.3 The New Resolution Shares will not be and are not required to be registered under the US Securities Act in reliance on the exemption from registration provided by Section 3(a)(10) of that Act. As Resolution has not been and will not be registered under the US Investment Company Act pursuant to the exemption provided by Section 3(c)(7) thereof, the New Resolution Shares will be issued to, or for the account or benefit of, persons located within the United States and its, or for the account or benefit of, US Persons (as defined in Regulation S under the U.S. Securities Act) only if such persons have demonstrated that they are Qualified Purchasers (as defined in Section 2(a)(51) of the US Investment Companies Act).

2.4 The New Resolution Shares have not been and will not be registered under applicable laws of any Restricted Jurisdiction. Accordingly, the New Resolution Shares may not offered, sold, reoffered, resold, pledged or otherwise transferred in or into any Restricted Jurisdiction.

2.5 The New Resolution Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing Resolution Shares. Applications will be made to the UKLA for the New Resolution Shares to be admitted to the Official List and to the London Stock Exchange for the New Resolution Shares to be admitted to trading.

2.6 Friends Provident Shares which will be acquired under the Acquisition will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

APPENDIX 2

Definitions

The following definitions apply throughout this document and the accompanying documents, unless otherwise stated or the context otherwise requires:

"1985 Act"	the Companies Act 1985 (as amended);
"2006 Act"	the Companies Act 2006 (as amended);
"Acquisition"	the acquisition by Resolution Holdings (UK) Limited of the entire issued share capital of Friends Provident pursuant to the Scheme;
"APE"	annualised premium equivalent;
"Basic Terms"	the basic terms of the Acquisition, set out in detail in section 1 (the Acquisition) of this announcement;
"Boards"	the Friends Provident Board and the Resolution Board;
"Business Day"	any day, other than a Saturday, Sunday or public or bank holiday, on which banks are generally open for business in the City of London;
"Cash Component"	the cash component of the Basic Terms of the Acquisition, as set out in section 1 (The Acquisition) of this announcement;
"Code"	the City Code on Takeovers and Mergers;
"Conditions"	the conditions to the Acquisition which are set out in section of Appendix 1 to this announcement;
"Court"	the High Court of Justice of England and Wales;
"Court Meeting"	the meeting of Scheme Shareholders to be convened pursuant to an order of the Court pursuant to Part 26 of the 2006 Act for the purpose of considering and, if thought fit, approving the Scheme (with or without modification), and any adjournment thereof;
"Credit Suisse"	Credit Suisse Securities (Europe) Limited;
"Daily Official List"	the Daily Official List published by the London Stock Exchange;
"Disclosures Rules and Transparency Rules"	the rules and regulations made by the Financial Services Authority in its capacity as the UKLA under the FSMA, and contained in the UKLA's publication of the same name;
"EEV"	European Embedded Value, a basis on which certain supplementary financial information is prepared in accordance with the European Embedded Value Principles issued in May 2004 by the CFO Forum as supplemented by the Additional Guidance on European Embedded Value disclosures carried in October 2005;
"EGM"	the general meeting of Friends Provident Shareholders to be convened in connection with the Acquisition, and any adjournment thereof;
"EGM Resolutions"	the special resolutions to approve, amongst other things, the cancellation of the entire issued share capital of Friends Provident, the alteration of Friends Provident's articles of association and such other matters as may be necessary to implement the Scheme in the form set out in the Scheme Document;
"Enlarged Group"	the combined Resolution Group and Friends Provident Group from the date on which the Scheme becomes effective;
"Enlarged Group Shareholders"	shareholders of Resolution from the date on which the Scheme becomes effective from time to time;
"F&C"	F&C Asset Management plc, a company (with registered number SC073508) with its registered office at 80 George Street, Edinburgh EH2 3BU;
"Form of Proxy"	the form of proxy or form of direction (as the case may be) for use by Friends Provident Shareholders at the EGM and Court Meeting;
"FPLP"	Friends Provident Life and Pensions Limited; a company incorporated in England and Wales (with registered number 04096141) with its registered office at Pixham End, Dorking, Surrey RH4 1QA;
"Friends Provident"	Friends Provident Group plc, a company incorporated under the 1985 Act (registered under number 6861305, with registered office at Pixham End, Dorking, Surrey RH4 1QA);
"Friends Provident Board" or "Friends Provident Directors"	the board of directors of Friends Provident;
"Friends Provident Group"	Friends Provident and each of its subsidiaries and subsidiary undertakings from time to time;
"Friends Provident Holdings Board"	the board of directors of Friends Provident Holdings;
"Friends Provident Holdings"	Resolution Holdings (UK) Limited (to be renamed Friends Provident Holdings (UK) Limited on completion of the Acquisition);
"Friends Provident Holdings Group"	Friends Provident Holdings and its subsidiary undertakings from time to time;
"Friends Provident Shareholders"	the holders of Friends Provident Shares, from time to time, including (where applicable) those who hold their shares through the Nominee Arrangement;
"Friends Provident Shares"	the existing unconditionally allotted or issued and fully paid (or credited as fully paid) ordinary shares of 5 pence each in the capital of Friends Provident and any further such shares which are unconditionally allotted or issued on or prior to the date on which the Acquisition closes or, subject to the provisions of the Code, such earlier date or dates as Resolution may decide;
"Friends Provident Share Schemes"	Friends Provident Executive Long Term Incentive Plan, Friends Provident Executive Share Option Scheme, Friends Provident Deferred Bonus Plan 2005, Friends Provident 2009 Below Board Long Term Incentive Plan, Friends Provident Turnaround Plan, Friends Provident Sharesave Scheme 2001, Friends Provident Sharesave Scheme 2003, Friends Provident All-Employee Share Ownership Plan, Friends Provident Group Executive Long Term Incentive Plan 2009, Friends Provident Group Executive Share Option Scheme 2009, Friends Provident Group Deferred Bonus Plan 2009, Friends Provident Group Below Board Long Term Incentive Plan 2009, Friends Provident Group Sharesave Scheme 2009, Friends Provident Group All-Employee Share Ownership Plan 2009 and any other arrangements for involving the employees of Friends Provident and/or members of the Friends Provident Group in the share capital of Friends Provident;
"FSA"	Financial Services Authority;
"FSMA"	Financial Services and Markets Act 2000 (as amended);
"Further Cash Election"	the right of Friends Provident Shareholders to elect to receive cash in respect of Friends Provident Shares held in excess of the Initial Shares, subject to the total amount of cash required to satisfy the cash component of the Basic Terms and Further Cash Election not exceeding the Maximum Cash Amount, as described in section 1 (The Acquisition) of this Announcement;
"IFRS"	International Financial Reporting Standards;
"Implementation Agreement"	the agreement between Resolution and Friends Provident, dated the date of this announcement, in relation to the implementation of the Acquisition;
"Initial Shares"	up to the first 2,500 Friends Provident Shares held on the Scheme Record Date by a Friends Provident Shareholder, which may be adjusted downwards in accordance with the provisions of section 1 (The Acquisition) of this announcement, taking into account the Maximum Cash Amount;
"Lazard"	Lazard & Co., Limited;
"Life and Asset Management Group"	companies and/or businesses which are part of the Resolution Group and have substantial operations consisting of life assurance and/or asset management activities; and/or are listed in, or undertake a significant part of their business in, the UK and/or Western Europe;
"Life and Asset Management Sectors"	companies and/or businesses (i) which have substantial operations consisting of life assurance and/or asset management activities; and (ii) which are listed in, or undertake a significant part of their business in, the UK and/or Western Europe;
"Life Group"	Friends Provident Holdings and its subsidiary undertakings from time to time;
"Listing Rules"	the rules and regulations made by the Financial Services Authority in its capacity as the UKLA under the FSMA, and contained in the UKLA's publication of the same name;
"Lombard"	Lombard International Assurance S.A.;
"London Stock Exchange"	London Stock Exchange plc;
"Lower Tier 2 Debt"	the 12 per cent. fixed rate guaranteed subordinated notes due 2021 issued in May 2009;
"Maximum Cash Amount"	the amount of £500 million available to satisfy the aggregate of all cash entitlements under the Acquisition;
"Meetings"	the Court Meeting and/or the EGM as the case may be;
"New Resolution Shares"	the Resolution Shares to be issued in connection with the Acquisition on the terms set out in this announcement;
"Nominee Arrangement"	the arrangement pursuant to which certain beneficial holders of Friends Provident Shares hold their interests through Equiniti Corporate Nominees Limited, in whose name the relevant Friends Provident Shares are registered;
"offer"	the offer to be made by Resolution Holdings (UK) Limited to acquire all the Friends Provident Shares and, where the context so requires, any subsequent revision, variation, extension or renewal thereof;
"Offer Period"	the period commencing on (and including) 13 July 2009 and ending on the date on which the Scheme becomes effective;
"Official List"	the official list maintained by the UKLA;
"Panel"	the Panel on Takeovers and Mergers;
"pounds sterling", "£" or "pence"	the lawful currency of the United Kingdom;
"Reduction Court Order"	the order of the Court confirming the Reduction of Capital under section 137 of the 1985 Act;
"Reduction of Capital"	the reduction of Friends Provident's share capital pursuant to section 135 of the 1985 Act, including the cancellation and extinguishing of the Scheme Shares provided for by the Scheme;
"Reduction Court Order"	the order of the Court confirming the Reduction of Capital under section 137 of the 1985 Act;
"Reduction Record Time"	the time and date specified as such in the Scheme Document, expected to be 6.00 p.m. on the Business Day immediately prior to the date on which the Reduction Court Order is made;
"Regulatory Information Service"	any of the services set out in Appendix 3 to the Listing Rules;
"Resolution"	Resolution Limited, a company incorporated in Guernsey (with registered number 49558) with registered office at Trafalgar Court, Les Banques, St. Peter Port, Guernsey GY1 3QL, Channel Islands;
"Resolution Board" or "Resolution Directors"	the board of directors of Resolution;
"Resolution Group"	Resolution and each of its subsidiaries and subsidiary undertakings from time to time;
"Resolution Shareholders"	the holders of Resolution Shares, from time to time;
"Resolution Shares"	the ordinary shares of no par value each in the capital of Resolution;
"Restricted Jurisdiction"	the US and any other jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Resolution Holdings (UK) Limited regards as unduly onerous;
"Restricted Overseas Person"	a person (including an individual, partnership, unincorporated syndicate, limited liability company, unincorporated organisation, trust, trustee, executor, administrator or other legal representative) in, or resident in, or any person whom Resolution Holdings (UK) Limited believes to be in, or resident in, any jurisdiction (other than persons in the UK) whom Resolution Holdings (UK) Limited determines to treat as restricted overseas persons in order to observe the laws of such jurisdiction or to avoid the requirement to comply with any governmental or other consent or any registration, filing or other formality which Resolution Holdings (UK) Limited regards as unduly onerous;
"ROL"	Resolution Operations LLP;
"Scheme"	the proposed scheme of arrangement under Part 26 of the 2006 Act between Friends Provident and Scheme Shareholders, with or subject to any modification, addition or condition thereto approved or imposed by the Court and agreed to by Friends Provident and Resolution;
"Scheme Court Hearing"	the hearing at which the Scheme Court Order is sought;
"Scheme Court Order"	the order of the Court sanctioning the Scheme under Part 26 of the 2006 Act;
"Scheme Document"	the document to be despatched to Friends Provident Shareholders and others following the date of this announcement containing, amongst other things, the Scheme and the notices of the Meetings;
"Scheme Documentation"	the Scheme Document and the accompanying Form of Proxy to be despatched to Friends Provident Shareholders and others following the date of this announcement;
"Scheme Record Date"	6.00 p.m. on the Business Day immediately preceding the date on which the Scheme becomes effective pursuant to its terms;
"Scheme Shareholders"	the holders of Scheme Shares;
"Scheme Shares"	all Friends Provident Shares: (i) in issue at the date of the Scheme Document; (ii) (if any) issued after the date of the Scheme Document and before the Voting Record Time; and (iii) (if any) issued at or after the Voting Record Time but on or before the Reduction Record Time either on terms that the original or any subsequent holders thereof shall be bound by the Scheme or in respect of which the holders thereof have agreed in writing to be bound by the Scheme, but excluding Friends Provident Shares beneficially owned by any member of the Friends Provident Group;
"Share Component"	the component of the Basic Terms of the Acquisition payable in Resolution Shares as set out in section 1 (The Acquisition) of this announcement;
"Share Election"	the right of Friends Provident Shareholders to take Resolution Shares instead of all or a part of the Cash Component, as set out in section 1 (The Acquisition) of this announcement;
"STICS"	Friends Provident's 6.875 per cent. step-up tier one insurance capital securities issued on 20 November 2003 and Friends Provident's 6.292 per cent. step-up tier one insurance capital securities issued on 30 June 2005;
"Third Party"	any central bank, ministry, governmental, quasi-governmental (including the European Union), supranational, statutory, regulatory or investigative body or authority (including any national or supranational anti-trust or merger control authority), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof), private body exercising any regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body or any other person or body whatsoever in any relevant jurisdiction, including for the avoidance of doubt the Panel;
"UKLA"	the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA;
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland;
"United States" or "US"	the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction;
"US Investment Company Act"	the US Investment Company Act 1940, as amended;
"US Securities Act"	the US Securities Act of 1933, as amended;
"Voting Record Time"	the time and date specified in the Scheme Document by reference to which entitlement to vote on the Scheme will be determined, expected to be 6.00 p.m. on the day which is two days before the date of the Court Meeting or, if the Court Meeting is adjourned, 6.00 p.m. on the day which is two days before the date of such adjourned Court Meeting;
"Wider Friends Provident Group"	Friends Provident and its subsidiary undertakings, associated undertakings and any other undertaking in which Friends Provident and/or any such subsidiary or associated undertakings (aggregating their interests) has or together have a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in the 2006 Act); and
"Wider Resolution Group"	Resolution and its subsidiary undertakings, associated undertakings and any other undertaking in which Resolution and/or any such subsidiary or associated undertakings (aggregating their interests) has or together have a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in the 2006 Act).

For the purposes of this announcement "subsidiary", "subsidiary undertaking", and "undertaking" have the meanings given by the 2006 Act and "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations.

Certain other capitalised terms not otherwise defined above are defined and used elsewhere in this document.

All times referred to in this document are London times unless otherwise stated.

APPENDIX 3

SOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

1. Unless otherwise stated, financial information relating to the Friends Provident Group has been extracted or derived (without any adjustment) from the audited annual report and accounts for Friends Provident for the year ended 31 December 2008 and Friends Provident's announcement dated 11 August 2009 of its interim results for the six months to 30 June 2009 (which are unaudited).

2. The value of the Acquisition is calculated by reference to the price of 88.25 pence per Resolution Share, being the closing price on 7 August 2009.

3. As at the close of business on 10 August 2009, being the last business day prior to the date of this announcement, Friends Provident had in issue 2,340,000,000 Friends Provident Shares and Resolution had in issue 660 million Resolution Shares. The International Securities Identification Number for Friends Provident Shares is GB00B3T69350 and for Resolution Shares is GG00B3FHW224.

5. Unless otherwise stated, all prices and closing prices for Friends Provident Shares and Resolution Shares are closing middle market quotations derived from the London Stock Exchange Daily Official List (SEDOL).

6. The premium calculations to the price per Friends Provident Share have been calculated by reference to:

a price of 75 pence per Friends Provident Share, being the closing price on 10 August 2009; and

a price of 60.4 pence per Friends Provident Share, being the closing price on 10 July 2009.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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