24th Oct 2007 17:18
Pearl Assurance PLC24 October 2007 24 October 2007 For Immediate Release NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO ORFROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION Statement re: Resolution plc ("Resolution") Pearl Group Limited ("Pearl") notes the announcements today by Resolution andFriends Provident plc ("Friends Provident"). Proposed return of capital Pearl notes the proposed target return of capital to shareholders of the mergedgroup of £1 billion expected to be announced at the time of the 2007 results anda further target return of capital from the proceeds of disposals of certainassets with a combined embedded value of £1 billion. Pearl also notes thatResolution's announcement on 10 September 2007 stated that Resolution hadalready commenced discussions with parties in relation to such disposals. Pearlquestions: - Why should Resolution's surplus capital be shared with Friends Providentshareholders? - Why should any disposal proceeds be shared with Friends Providentshareholders? - What progress has been made on the disposal discussions? - Is there a definite timetable for the sales? - Would these disposals realise 100 per cent. of embedded value or less? Pearl's cash Offer is at 1.15x Resolution's tangible embedded value, anddelivers the entire consideration to Resolution Shareholders on completion. - These initiatives highlight that if the merger were allowed to proceed itwould transfer material tangible value from Resolution shareholders to FriendsProvident shareholders. - Adjusting for full exercise of the Friends Provident Convertible Bonds,Resolution Shareholders' share of any return of capital would be less than 49%. Commenting on today's announcements, Pearl said: "We do not understand why this value is being shared with Friends Providentshareholders. We believe this is further evidence that the merger is not in thebest interests of Resolution Shareholders" Friends Provident third quarter sales update Pearl also notes Friends Provident's third quarter sales update. Pearl wouldmake the following observations: - In the first 9 months of 2007, Friends Provident UK Life and pensions salesincreased by £385m, of which £355 million was represented by growth in GroupPensions business - Based on Pearl analysis of the Friends Provident FSA returns, FriendsProvident has witnessed a 76% increase in pension surrenders between 2004 and2006 from £935 million to £1,648 million. Furthermore in pensions new businesspremiums were £1,988 million in 2006 and surrenders were therefore 83% of newbusiness premiums in 2006. - Group pensions represents an unattractive proposition for Resolutionshareholders with exposure to lapse assumptions, high acquisition costs and longpayback periods 2004 2005 2006 % change -------- ------- -------- -------Life surrenders £875m £1,004m £1,058m 21% Pension surrenders £935m £1,155m £1,648m 76% -------- -------- -------- ------- £1,810m £2,158m £2,707m 50% Source: Friends Provident FSA Returns 2004 - 2006 Pearl's Offer for Resolution represents compelling value On 19 October 2007, Impala Holdings Limited, a subsidiary of Pearl, announced acash Offer for Resolution at 691 pence for each Share. In addition, ResolutionShareholders will be entitled to receive and retain the interim dividend of 9.17pence per Resolution Share payable to Resolution Shareholders on 26 October2007. Under the terms of the Offer (including the retained dividend) ResolutionShareholders will receive 700.17 pence per share in cash, which is excellentvalue for Resolution Shareholders and represents: - a multiple of 1.15x Resolution's tangible embedded value per share of611 pence as at 30 June 2007, which is significantly in excess of that paid inrecent transactions involving primarily closed life fund businesses in the UK; - a premium of 24.5 per cent. to the "see-through" market value of theResolution/Friends Provident merger of approximately 563 pence per ResolutionShare, based on the merger terms announced by Resolution and Friends Providenton 25 July 2007 and on the closing price of Friends Provident shares on23 October 2007; and - a premium of 13.7 per cent. to the closing Resolution share price of 616 penceon 25 July 2007, the day prior to Pearl's announcement disclosing its interestin Resolution, but following Resolution's announcement of its proposed mergerwith Friends Provident. Pearl is Resolution's largest shareholder and intends to vote against theResolution / Friends Provident Merger Proposals - Pearl is substantially Resolution's largest shareholder with an aggregateinterest in 112,949,386 Resolution ordinary shares, representing approximately16.5 per cent. of the issued share capital of Resolution. - Pearl continues to believe that the proposed merger with Friends Providentwill not create as much value for Resolution Shareholders as the Offer.Accordingly, Pearl intends to vote against the Resolution/Friends ProvidentMerger Proposals. Terms used but not defined in this announcement shall have the meanings given tothem in the Offer announcement of 19 October 2007. Enquiries: Pearl Group LimitedTerry Eccles +44 (0) 20 7677 4054 Citigate Dewe RogersonAnthony Carlisle +44 (0) 20 7638 9571+44 (0) 7973 611 888 (mobile) Deutsche Bank (Financial Adviser and Corporate Broker to Pearl)Tadhg Flood / Mike Lamb / Omar Faruqui +44 (0) 20 7545 8000Louise Miller (Corporate Broking) Morgan Stanley (Financial Adviser and Corporate Broker to Pearl)Simon Robey / Jason Windsor / Laurence Hopkins +44 (0) 20 7425 8000Mark Brooker (Corporate Broking) ABN AMRO (Financial Adviser to Pearl)Fiona Clutterbuck / Andrew Owens / Samuel Perowne +44 (0) 20 7678 8000 Deutsche Bank AG is authorised under German Banking Law (competent authority:BaFin - Federal Financial Supervising Authority) and with respect to UKcommodity derivatives business by the Financial Services Authority; and isregulated by the Financial Services Authority for the conduct of UK business.Deutsche Bank AG is acting exclusively for Impala and Pearl and no-one else inconnection with the Offer and will not be responsible to anyone other thanImpala and Pearl for providing the protections afforded to clients of DeutscheBank AG nor for providing advice in relation to the Offer or any matter referredto in this announcement. Morgan Stanley & Co. Limited is acting exclusively for Impala and Pearl andno-one else in connection with the Offer and will not be responsible to anyoneother than Impala and Pearl for providing the protections afforded to clients ofMorgan Stanley & Co. Limited nor for providing advice in relation to the Offeror any other matter referred to in this announcement. ABN AMRO Corporate Finance Limited is acting as financial adviser for Impala andPearl and no-one else in connection with the Offer and will not be responsibleto any other person for providing the protections afforded to clients of ABNAMRO Corporate Finance Limited nor for providing advice in relation to the Offeror any other matter referred to in this announcement. Appendix 1 Bases and Sources (a) The Resolution tangible embedded value per share is extracted from the Resolution unaudited results for the six months to 30 June 2007. It is based on £4,340 million embedded value as at 30 June 2007 adjusted to deduct £144 million in goodwill. (b) Reference to Resolution shareholders share of any return of capital being less than 49% is based on the Friends Provident and Resolution shareholder documentation published on 8 October 2007. (c) The surrender of Friends Provident's pensions business has been sourced from Friends Provident's 2004 to 2006 FSA returns. (d) Reference to the interim dividend of 9.17 pence is taken from the Resolution unaudited results for the six months to 30 June 2007. (e) Unless otherwise stated, all prices for shares, and calculations thereof or relating thereto have been derived from Datastream and represent closing middle market prices on the relevant date. (f) The Resolution "see-through" price or market value is calculated by multiplying the Friends Provident closing price on the relevant date by the exchange ratio of 3.25, being the number of Friends Provident shares issuable in respect of each Resolution share as set out in the original Resolution merger announcement dated 25 July 2007. (g) The number of Resolution Shares is based on 686,402,970 million shares in issue on 12 October 2007 as announced by Resolution in its 2.10 announcement on that date. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Fondul Proprietatea