British insurer Friends Provident said yesterday it had agreed to a takeover by investment group Resolution in a deal worth £1.858 billion (US$3.06 billion).
Friends chief executive Trevor Matthews said the insurer looked “forward to playing a leading role in industry consolidation.”
The takeover comes amid a tentative recovery for major insurance companies, which have been hard hit by the global economic crisis and have put in place painful cost-cutting programs including massive job cuts.
Meanwhile the acceptance by Friends, which specializes in life insurance and pensions, comes after it had turned down three other approaches by Resolution since last month.
“Resolution and Friends Provident believe that consolidation is both desirable and inevitable given the fragmentation, complexity and low returns in these sectors,” the pair said in a joint statement.
Resolution said its offer, which is worth £1.86 billion, is based on the investment group’s closing share price of 88.25 pence on Friday.
Resolution is offering 0.9 shares for each Friends Provident share. As part of the deal, each Friends shareholder will be able to accept 79.4 pence for each share up to a total of 2,500 shares.
The maximum cash amount offered by Resolution is £500 million, or about 27 percent of the total value of the acquisition.
The investment group added that it expected to follow up the takeover with further transactions.
“The Resolution Board believes that this consolidation and restructuring will, over time, deliver significant value to enlarged group shareholders,” it said.
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