Friends rejects private equity bid

Friends rejects private equity bid

The insurance firm's shares jumped in early trading after it confirmed that JC Flowers approached it last Thursday offering to pay 150p a share, which values the company at £3.4bn.

Although the offer is around 25% above Friends' current share price, it is significantly less than that 175p which JC Flowers tabled last year. It is also below the value of Friends' long-term business - which is estimated at 160p a share.

As well as rejecting the proposal, Friends is also still refusing to enter into talks with its US suitor.

"The board of Friends Provident informed JC Flowers & Co UK Ltd that its proposal significantly undervalues Friends Provident plc and its prospects and does not represent a basis for discussion," it said today.

Shares in the company were up 3.5p at 123.6p today, a rise of nearly 3%.

The future of Friends has been uncertain since a planned £8.7bn merger with rival insurer Resolution collapsed last autumn. It is currently operating without a chief executive after poaching Trevor Matthews from Standard Life. He cannot start work until the summer for contractual reasons.

The company has proposed selling off several non-core operations with the loss of 600 jobs, but the plan was not well received in the City.