Friends Prov dives into Cowdery deal

THE BOARD of Friends Provident unanimously supported a fourth takeover bid from Clive Cowdery&rsquo;s buyout vehicle Resolution yesterday, heralding an end to one of the world&rsquo;s oldest life insurers.<br /><br />Trevor Matthews, chief executive of the 177-year old firm that was founded as a friendly society for Quakers, said he was &ldquo;excited&rdquo; at Cowdery&rsquo;s plans to restructure the firm and consolidate it with two other insurers.<br /><br />Although the other insurers are as yet as unnamed, Cowdery is thought to have his sights set on Legal and General as well as the life assurance businesses of Lloyds Banking Group.<br /><br />Meanwhile, Friends yesterday reported a rise in pre-tax profit in the first half to &pound;38m, from &pound;13m in the same period in 2008. The group maintained its interim dividend at 1.3p a share.<br /><br />Guernsey-domiciled Resolution reported a first-half loss of &pound;7.3m, worse than its &pound;0.7m loss last year, thanks in part to due diligence work on other firms that were not taken over.<br /><br />The group said that once the deal is completed it will start paying a dividend, which it expects to be 2.72p per share.<br /><br />Cowdery is set to swap 0.9 shares in Resolution for each Friends share in a &pound;1.86bn deal that values Friends&rsquo; shares at 79.4p.<br /><br />Panmure Gordon analyst Barrie Cornes said the price is 31 per cent lower than the firm&rsquo;s &ldquo;European embedded value&rdquo;, which includes future insurance returns, and therefore &ldquo;disappointing on the face of it&rdquo;.<br /><br />But Cornes added that Friends would have been strategically challenged if it had decided to go it alone, and that shareholders should welcome the deal.<br /><br />Resolution bosses Cowdery and ex-Financial Services Authority head John Tiner will take up seats on Friends&rsquo; board, while Matthews is to stay on as chief executive.<br /><br />The group will move to the main London market as part of the move, taking up a spot in the blue-chip FTSE 100 index.