Overview: Friends Provident faces battle for closed funds

Friends Provident is trying its best to get its merger with fellow life
insurer Resolution
signed, sealed and delivered, but it is facing some fearsome opposition. It’s
currently involved in a battle for the spoils of Resolution’s closed life
assurance funds, with Standard Life and Pearl all hoping to crash the party.

Four FDs are battling to be top financial zombie, and create what will
probably be the leading player in closed-life fund management.

What happened

Until recently, Resolution’s suitors were warily circling each other, waiting
for somebody to make the first move. But in September, Standard Life made its
opening gambit by saying that it would consider a cash and shares offer for
Resolution, challenging Friends’ designs for a match-up.

Pearl has implied that it would pay no more than 660p a share for Resolution,
a sum that analysts have indicated is insufficient.

What’s going to happen?

Pearl says: ‘There can be no certainty that Pearl will make an offer for
Resolution or as to price or timing of any such offer,’ but everyone knows that
they’re interested.

So who are the FDs in the frame? By the reported make-up of the mooted
Friends Financial board, the luckless Jim Smart is likely to be thumbing through
the employment pages. With the other two suitors, the FDs should be in a
somewhat stronger position.

Standard Life’s FD David Nish is an industry heavyweight with a proven track
but his battle with Resolution FD Jim Newman will be harder to call if his
company wins out.

Pearl, whose Life division’s finance function is headed up by Simon Smith,
has taken a hard line on Resolution, building a 16% stake.

It said last week that Resolution’s plan to buy Friends Provident contained
‘significant risks’ and wouldn’t create any more value for shareholders than
other options.
There are a number of alternative endings that could manifest themselves at the
conclusion of this corporate blockbuster.

Pearl could continue snapping up shares in Resolution if its advances are
shot down. Both the FDs of Pearl and Resolution may have more on their minds
than numbers, too. The characters at the centre of the saga notoriously do not
get on, according to reports.

Pizza to pubs entrepreneur Hugh Osmond spearheads Pearl. The relationship
between him and Resolution’s livewire chairman Clive Cowdery is said to be

On top of that, there are suggestions that Standard Life might buy only some
funds from Resolution as part of a deal with Pearl.

Will all four FDs still be standing by the time this tale reaches its climax?

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