Friends Provident has called on JC Flowers, the US private investment firm which has expressed an interest in buying the company, to put up or shut up because the uncertainty is damaging its business.
The insurer made the plea as it announced full-year results that saw one-off costs reduce 2006's £509m pre-tax profit to just £16m. JC Flowers, headed by the former Goldman Sachs partner Christopher Flowers, revealed in January that it had bought a 2.7 per cent stake in Friends Provident and said it might make a bid. The turnaround specialist had previously considered a bid for Northern Rock to spearhead its move into UK financial services.
Jim Smart, Friends' finance director, said: "They have to come off the fence and let us know what they have got in mind. The uncertainty for our people, our customers and our advisers is not good for our business or our shareholders." Mr Smart said Friends had told major shareholders that it would consider a serious bid but that in an offer period it needed a formal approach from Flowers.
A spokesman for JC Flowers said Friends Provident's comments were "encouraging and we look forward to having a meeting as soon as possible". JC Flowers is unlikely to make an offer this week as it digests the information in the insurer's results.
JC Flowers is said to have made an informal approach towards the end of last year suggesting a deal at 175p a share. Friends Provident shares rose 4.2 per cent to 124p yesterday.
Friends Provident announced a restructuring plan in January that failed to convince investors. After expanding too quickly in low-margin, long-term corporate pensions and suffering a drop in more profitable protection policies, the company said it would scrap plans to expand in wealth management and concentrate on pensions and protection.
Mr Smart said Friends had plenty of interest from trade buyers for its Lombard, F&C and Pantheon businesses. Management buyouts are unlikely in the current frozen debt markets, he said.
Friends Provident said Mr Smart would leave the company in August. He will follow Philip Moore, the chief executive who stepped down in November after Friends' planned merger with Resolution, the closed-life fund operator, was wrecked by Pearl's successful bid for Resolution.
Mr Smart said he did not expect a pay-off because the decision was his and that he would be happy if Friends paid him a bonus for the time he serves before leaving. He said Friends would have 100 per cent of his time until his departure, by which time Trevor Matthews would have joined as chief executive from Standard Life.Reuse content