Resolution sweetens bid for Friends

By Lorraine Turner

LONDON (Reuters) - Financial buyout firm Resolution on Monday sweetened its proposed offer for insurer Friends Provident, including a cash element and a commitment on the dividend and clarification on the structure.

The Guernsey-based vehicle of entrepreneur Clive Cowdery said on Monday it had sought to address the concerns of Friends Provident retail shareholders by improving its initial bid and offering cash for the first 2,500 shares.

"This should allow the vast majority of retail shareholders to exit in cash if they choose to do so," Chief Executive John Tiner said on a call with journalists.

The proposed bid, which was revealed by sources on Sunday, is likely to lead to a deal, said analysts, as shares in Friends rose by 2.94 percent to 73.6 pence at 9:45 a.m.

"We think that ultimately this will prove to be a good basis for discussion that will lead to the ultimate take over of FP by Resolution," said Barrie Cornes at Panmure Gordon.

But the initial price is now "vulnerable" he added, after Resolution failed to restate their offer of 0.8 Resolution shares for every one Friends Provident share.

Last week, Friends had rejected an all-share takeover approach from Resolution as too low. This led to Friends unveiling a deal to join forces with Resolution on Friday, under which the insurer would buy Resolution.

Cowdery said on Monday he would be "surprised" if Resolution were to receive a counter-proposal from Friends.