Resolution close to victory with new Friends offer

The tycoon Clive Cowdery was on the brink of winning control of Friends Provident last night as the 177-year-old life insurance companyre-opened talks over a renewed takeover proposal which valued the company at around £1.86bn.

Mr Cowdery said he was prepared to swap 0.9 Resolution shares for every Friends Provident share, with up to £500m being offered as a partial cash alternative to buy off nearly three-quarters of a million retail shareholders who received their holdings when the company converted from a mutual to a plc.

However, sources close to Mr Cowdery said there had been no concessions offered on Resolution’s governance, which Friends had said was a major stumbling block to a deal.

Resolution is based in Guernsey and Mr Cowdery and his team stand to make millions in a private equity-style pay structure if they meet performance targets. They want to use Friends Provident as a vehicle to buy up other life insurers and consolidate them.

His previous proposal would have given Friends shareholders 0.82 Resolution shares for every Friends Provident share they hold. Sources close to the deal have said that Friends shareholders told the company to drop its concerns about the governance of Resolution and to focus on value instead.

Several major institutions have significant stakes in both companies and have been pushing quietly for a deal to be done.

While Friends insisted that there could be “no certainty” of a transaction, it is likely that the final terms could be announced as soon as this morning. Mr Cowdery has pledged to keep Friends Provident’s management in place, including its chief executive Trevor Matthews.