DealZone

Friends realises it is good to talk

July 17, 2009

What a difference a year and an invigorated chief executive can make.

British life insurer Friends Provident and its advisers, Goldman Sachs and JP Morgan Cazenove, have turned the tables on would-be suitor, Clive Cowdery’s Resolution.

For those few who are unfamiliar with Cowdery, he usually brings a splash of colour and drama to the usually staid and impenetrable world of UK life insurance. As I wrote earlier this week

Resolution kicked off the week with an audacious approach to Friends, who did not want to play ball.

But Friends regained the initiative today, tabling a quick response and setting out terms for Resolution to consider.

The reaction from Friends is in marked contrast to its attitude in November 2007 and April 2008, when it was faced with offers from U.S. private equity firm JC Flowers. Back then, Friends dismissed approaches at 175 pence and 150 pence a share and refused to talk to Flowers.

How good those offers look now, with Friends Provident shares closing on Friday at 71.5 pence.

The difference this time round, according to many analysts, is CEO Trevor Matthews, who is credited with bringing much needed focus to Friends Provident by cutting costs and consolidating key product lines.

Shareholders, frustrated that those earlier offers passed them by, have no doubt been instrumental as well. Many of the large UK insurers are invested in Resolution and Friends Provident, so it’s a fair bet they would want the two sides to talk.

As to what happens next, the ball is in Resolution’s court. Over to Cowdery, his team and their adviser Credit Suisse.

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