Resolution may sweeten Friends bid

LONDON (Reuters) - Financial buyout firm Resolution is likely to table a sweetened bid proposal for insurer Friends Provident this week, including a cash element and a commitment on dividends, a source close to the matter said.

Friends rejected an all-share proposal from Resolution, the Guernsey-based vehicle of entrepreneur Clive Cowdery, last Monday worth 1.7 billion pounds at that time.

But it said on Friday it would enter into talks over its own alternative proposal that would see it make an all-share takeover of Resolution.

Resolution said on Friday it would welcome talks, but remained to be convinced by the structure proposed by Friends.

The Sunday Express newspaper said, without citing sources, that Resolution would make a revised 1.9 billion pound bid proposal this week, worth about 80 pence a share and including some cash.

Resolution declined to comment.

However, a source close to the matter said Resolution was likely to make a proposal that would include some cash to appeal to Friends legion of small shareholders.

It would also look at making a commitment on paying dividends to satisfy investors that own Friends' shares for their yield, the source said.

Friends shares closed at 71.5 pence on Friday, while Resolution ended on 92.25 pence.

(Reporting by Mark Potter)