JC Flowers will not
produce a 'knee-jerk reaction' after Friends Provident rejected its
takeover bid on Monday, but is to 'spend time reflecting' on its
position, a spokesperson for the private equity firm said.
flat-out rejected Flowers' 150p per share cash bid, a takeover deal
between the two still appears to be in the offing.
chairman Sir Adrian Montague was quoted in the press on
Tuesday saying that there was 'no grand canyon' between the two on
price. He said that Flowers had 'started down the track' in terms
of putting a reasonable proposal together.
The bid represents a
premium to the market but would have forced the insurer to
slash its dividend; something Friends would have been unlikely to
Tim Young of brokers
Collins Stewart, wrote in a note: 'We can not agree with Adrian
Montague that Flowers' offer significantly under-values the
He said that Friends
was in a position of significant weakness, having 'destroyed
massive shareholder value over the past year, with a flimsy
recovery strategy, an untested CEO…limited capital resources
and apparently no other bidders'. Young said that these risks were
fully discounted in the price.
One leading Friends
shareholder - a Citywire AA-rated fund manager who asked to remain
anonymous - suggested that the latest JC Flowers bid for the group
may be deliberately undervaluing the company to allow it
to 'withdraw gracefully.'
Provident's shareprice stood at 128.2p at 9.50 on Tuesday
morning, having risen 4.5p or 3.6%