LONDON (Reuters) - U.S. buyout firm J.C. Flowers has lined up financing to back its proposed 3.5 billion pound takeover of Friends Provident FP.L, and made a fresh call on Monday for talks with the British life insurer.
Monday’s statement is Flowers’ first since its 150p-a-share proposal was made public and swiftly spurned by Friends last week, and will allow Flowers to meet the insurer’s shareholders.
So far, reaction to the proposal among shareholders has been mixed, though Friends’ largest investor, Scottish Widows, has publicly backed the rejection.
The takeover regulator ruled last week that Flowers must make an offer for Friends by the end of April or walk away, four months after it first expressed an interest.
“J.C. Flowers believes that the proposal is attractive, offers compelling and certain cash value for shareholders and represents a sound basis for entering into discussions,” it said on Monday, dismissing Friends’ rejection and media speculation it could raise the 150p proposal, already above current prices.
Friends shares, up strongly in early trade, were up 1.6 percent at 136p at 3:55 p.m., outperforming the wider market.
One source close to the matter had said it was unlikely for Flowers to consider a higher price at this stage, despite market hopes, as there is only one bidder in the ring.
Flowers, which has a 2.7 percent stake in Friends, paid up to 165p per share, meaning it would have to seek permission from the Takeover Panel to make an offer below 165p. Flowers said the drop in Friends’ share price since then, for example, could be used to waive the regulator’s condition.
Flowers said it was “very confident” in its funding arrangements for an offer — a mix of equity and debt, with the majority provided by J.C. Flowers and other co-investors. The firm has available capital in excess of $6 billion (3 billion pounds).
Flowers has sought meetings with Friends since it expressed an interest in the firm in January but calls for talks have been dismissed by Friends’ management, who said they would only consider an offer and were not ready for “fireside chats”.
Last week, Friends said the 150p proposal was not a “basis for discussion”. On Monday, Flowers reiterated its request for “direct engagement” and due diligence access, which it says is the condition for any offer.
Friends, however, signalled it did not yet see the basis for discussions or for the group to open its books.
“We made clear our position on their proposal last week. There is nothing new to say,” a Friends spokesman said.
Flowers has lined up a group of advisors including city heavyweight Martin Jacomb, former Prudential (PRU.L) chairman and Barclays (BARC.L) executive, whom it said would join Friends’ board as non-executives if the deal went ahead.
Friends, the smallest blue-chip life insurer, has been in the throes of a strategy review since it failed to merge with rival Resolution RSL.L last year and ousted its chief executive. It has said it could sell high-end insurer Lombard and its majority stake in fund manager F&C FCAM.L.
Additional reporting by Steve Slater; editing by Elizabeth Fullerton/Andrew Hurst