JC Flowers, the private equity group run by former Goldman Sachs banker Christopher Flowers, has been discussing a joint bid for Friends Provident with the insurer’s larger British rival, Standard Life, FT Alphaville understands.
The possible takeover remains at the planning stage and the bidders are not thought to have approached Friends management. But Flowers and Standard Life have been actively considering plans to pay as much 270p-a-share for Friends, valuing the business at £5.8bn.
The putative plan involves Flowers taking most of the target company’s international operations, with Standard Life consuming the bulk of its British business. Under the plan, Friends’ 51 per cent stake in asset manager Foreign & Colonial would probably be sold to an as-yet-unidentified third party.
Shares in Friends surged 12 per cent at one stage last week as rumours swept the market that Axa of France was planning a bid. The FT later reported that Axa has, indeed, been mulling a move on Friends, while FT Alphaville named JC Flowers as a potential private equity buyer.
In planning their own tilt at Friends, Flowers and Standard Life acknowledge that they might face fierce competition from rivals, that could include Old Mutual as well as Axa. The putative bidders have also considered whether Friends might react to an approach by trying to organise a “white knight” merger with the likes of Legal & General.
Standard Life has also considered the danger that it may itself become takeover prey in the next round of consolidation amongst European insurers — an event that might be triggered by its involvement with Flowers.
On Wednesday, Friends chief executive Philip Moore told Reuters he did not feel pressured “to do something rash or silly.”
“Takeover rumours have been around since we floated…My job is jut to run the business. If someone makes an offer that is really good value for shareholders, then of course we must look at it – it is our fiduciary duty. But if they make an offer, it is because they want us for what we are,” he said, on the side lines of a pensions and insurance conference London.
At the same conference in London, Trevor Matthews of Standard Life, was quoted by Bloomberg, saying: “There must be consolidation over the next five years…It is very hard to predict just who, what, when.”