22 Jan, 2008
Published: 10:53 Tuesday 22 January 2008
By: Dylan Lobo, Investment News Editor
in Friends Provident made little progress today after brokers
Collins Stewart poured cold water on speculation linking Swiss Re
with a bid for the UK's sixth largest insurer.
Yesterday US private equity firm JC Flowers indicated it was
mulling a 175p per share bid for the firm (FP.) which would value
the life insurer at around £4 billion.
Reports since have suggested Swiss Re would enter the race to
acquire the UK's sixth largest insurer with the group said to be
interested in the group's UK life and pensions arm. South African
insurer Old Mutual has also been linked with a possible bid.
But Collins Stewart believes these are unlikely scenarios as Old
Mutual would have to insure the successful sale of its Nedbank
stake, which would be tough in these market conditions, while Swiss
Re has seen its share price halve over the last year.
Collins Stewart is confident Flowers will unveil its proposal for
FP in the next few days.
Analyst Tim Young pointed out that Flowers typically holds its
cards close to its chest and yesterday's press leaks suggest his
strategy for the group is well advanced.
The broker expects an offer will be made before next Thursday when
Friends unveils the findings of its strategic review.
Young admitted £4 billion was a significant sum, especially
given neither the regulator and credit ratings agencies are keen on
gearing above 25%.
Young added that it is not inconceivable that Flowers would sell of
FP's high net-worth business Lombard to help fund the deal at a
price mooted at around £700 million.
He also pointed out that in the current market turbulence in the
asset management sector, the sale of FP's stake in F&C Asset
Management (FCAM) is less likely.
At 10.30am shares in Friends Provident were off a penny at