13th Jul 2009 09:41
Friends Provident rejects acquisition proposal from Resolution
The Board of Friends Provident Group Plc ("Friends Provident") confirms that it received an approach from Resolution Limited ("Resolution"), the UK secondary-listed, Guernsey incorporated company, regarding a possible offer, which it has rejected.
The Board is open-minded about the benefits of industry consolidation, but does not believe that Resolution's proposal is in the best interests of Friends Provident shareholders. The Board sent a letter to the board of Resolution setting out the reasons for their rejecting the offer.
The proposed terms of an all share offer of 0.8 new Resolution shares for every Friends Provident share are wholly inadequate to compensate Friends Provident shareholders for the suggested exchange of their shares into Resolution shares which would represent a very different type of investment for Friends Provident's shareholders than that which they hold today and one subject to very different risks;
The proposed terms offer Friends Provident shareholders little or no premium or uplift in value without a significant re-rating of the combined group, the substantial majority of which would be represented by Friends Provident's existing businesses;
Resolution's proposal would result in Friends Provident shareholders holding approximately 74% of the enlarged Resolution, broadly in line with Friends Provident's current market capitalisation relative to Resolution's;
The lack of commitment to Friends Provident's dividend policy represents a significant uncertainty for Friends Provident's shareholders;
The governance structure of the Resolution Group as it is currently constituted would offer Friends Provident shareholders less transparency and a structure significantly different from recognised public company best practice;
The structure of Resolution would also dilute Friends Provident shareholders' ongoing interest in Resolution through the various preferential interests accruing to Resolution's operating partners; and
The complexity of the proposed board and management structure would materially limit the remit of Friends Provident's highly regarded management team both strategically and operationally.
The Board believes that Friends Provident has a strong management team in place and a clear strategy to restructure the group as a standalone business and enhance its growth prospects. Trevor Matthews and his team have already made very real progress in delivering this plan and will update shareholders on progress at the Interim results on 11th August 2009.
The full text of the letter sent to the Board of Resolution is set out in the appendix to this announcement.
Enquiries:
Friends Provident +44 (0)845 641 7833 Sir Adrian MontagueRichard Everett / Chris Ford (investors)
Peter Timberlake (press)
Goldman Sachs International
+44 (0)20 7774 1000 Simon Dingemans
Paul Miller
J.P. Morgan Cazenove +44 (0)20 7588 2828 Tim Wise Conor Hillery Finsbury +44 (0)20 7251 3801Roland Rudd
James Murgatroyd
In accordance with Rule 2.10 of The City Code on Takeovers and Mergers, Friends Provident confirms that as at the close of business on 10 July 2009 its issued share capital consisted of 2,340,000,000 ordinary shares of 5 pence each ("ordinary shares"). The ISIN code for Friends Provident's ordinary shares is GB00B3T69350.
Goldman Sachs International is acting as financial adviser to Friends Provident and no one else in connection with the possible offer by Resolution and will not be responsible to any other person for providing the protections afforded to the clients of Goldman Sachs International nor for providing advice in relation to the possible offer by Resolution or any other matter referred to in this announcement.
J.P. Morgan Cazenove is acting as financial adviser to Friends Provident and no one else in connection with the possible offer by Resolution and will not be responsible to any other person for providing the protections afforded to the clients of J.P. Morgan Cazenove nor for providing advice in relation to the possible offer by Resolution or any other matter referred to in this announcement.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Resolution Limited or of Friends Provident Group plc, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Resolution Limited or Friends Provident Group plc, they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Resolution Limited or of Friends Provident Group plc by Resolution Limited or Friends Provident Group plc, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.
Appendix - letter to Resolution Limited
Mr Mike Biggs
Chairman
Resolution LtdPO Box 255
Trafalgar Port
Les Banques
St Peter Port
Guernsey, Channel Islands
GY1 3QL
10 July 2009
Dear Mike Thank you for your letter of 7 July 2009 summarising your proposals to acquire Friends Provident Group plc (Friends Provident) through an offer from Resolution Limited (Resolution).
Our Board has considered your proposals carefully but has concluded unanimously that they do not offer a basis for further discussions.
You have suggested that the acquisition of Friends Provident would offer Resolution the opportunity to drive consolidation in the UK life sector to the benefit of both sets of shareholders. We are open-minded about the benefits of industry consolidation, but at this stage, the pace, direction and value of your consolidation strategy is speculative and uncertain. If deals are secured, realising value involves risks and challenges in putting active life companies together that your proposals do not address. Our Board is not able to attribute any value to your strategy as it is based on such a lack of specific information.
The terms you have proposed offer Friends Provident shareholders little or no real uplift in value, and are wholly inadequate to compensate Friends Provident shareholders for the suggested exchange of their shares into Resolution shares. Resolution shares would represent a very different type of investment for our 750,000 shareholders than that which they hold today, and one subject to very different risks. The potential diminution or elimination of future dividends would represent a clear loss of value for Friends Provident's shareholders for which they are in no way being compensated.
The governance structure of the Resolution group as it is currently constituted would offer our shareholders less transparency and a structure significantly different from recognised public company best practice. The structure of Resolution would also dilute our shareholders' ongoing interest in Resolution through the various preferential interests accruing to your operating partners. In addition, the complexity of your proposed board and management structure would materially limit the remit of our highly regarded management team both strategically and operationally.
Together these various factors highlight the contrast between your proposals and Friends Provident's current plans. Friends Provident has a strong management team in place and a clear strategy to restructure the Friends Provident Group as a standalone business and enhance its growth prospects. Trevor Matthews and his team have already made very real progress in delivering this plan and our Board is confident the benefits of repositioning Friends Provident will become increasingly clear to all our shareholders over the coming months and years.
Having regard to all these factors, the rationale for our decision is clear. Yours sincerely
Adrian Montague
Related Shares:
Fondul ProprietateaFLG.L