Bid talk surrounds Friends Provident as JC Flowers builds new stake

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The Independent Online

JC Flowers, the private equity group which until recently was in the running to make a bid for Northern Rock, has built up a stake of almost 2 per cent in the troubled life assurer Friends Provident, sparking speculation that it may be considering a takeover bid for the company.

Friends' shares have plummeted over the past few months, after its plans to merge with its FTSE 100 rival Resolution were derailed by the takeover of Resolution by Pearl.

The group then ousted its chief executive, Philip Moore, in Nov-ember, and has yet to appoint a replacement. It is believed to have asked Standard Life's head of UK life and pensions, Trevor Matthews, to take the job.

However, Mr Matthews is reputed to have knocked the Friends board back. He remains favourite to take over the reins from Sandy Crombie, the current Standard Life chief executive, when he retires within the next few years.

Friends Provident's management are currently carrying out a strategic review of the business, the results of which are scheduled to be published on 31 January. It is thought that the board intends to lay out plans for a full restructure of the UK life and pensions business.

JC Flowers is believed to have looked at making a bid for Friends in the past, holding tentative talks with a number of insurers during the first half of last year, about the possibility of mounting a joint proposal to take out the company. The life insurer was rumoured to have received a number of approaches in the spring of last year, after issuing a profits warning admitting that it was not going to hit its ambitious growth targets.

F&C Asset Management, the fund manager in which Friends owns a 53 per cent stake, has also had a run of bad results. The business, which issued its own profit warning during the first half of last year, has been unstable ever since merging with Isis Asset Management more than three years ago.

Last week, rmours emerged that Standard Life, which lost out to Pearl in the battle for Resolution, may now be considering a bid for Friends.

Friends' deal with Resolution looked to be the perfect solution to the group's woes – and its collapse has had a devastating effect. Shares in the company are now down by a third since hitting five-year highs of almost 230p at the start of last year. They closed at 152.5p on Friday, giving the company a market value of £3.54bn.

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