Britain"s Resolution finally wins Friends

       Britain's Resolution, an acquisitions vehicle founded by entrepreneur Clive Cowdery, clinched its first deal yesterday with the ฃ1.86 billion ($3.1 billion) takeover of insurer Friends Provident.
       Resolution, created last year to buy life insurers and asset managers, said Friends Provident's management had agreed to back an improved bid giving shareholders 0.9 Resolution share per Friends share, a month after rejecting an initial offer.
       Cowdery told reporters Resolution was looking for at least two further acquisitions which would be merged and relisted on the stock market after two to three years of restructuring.
       Resolution's bid valued Friends Britain's sixth-biggest life insurer and an acquisition target since it demutualised and listed in 2001- at 79.4 pence per share, a 6% premium to Monday's closing price but little more than a third the 225 pence price it first listed at eight years ago.
       Cowdery said he was eyeing life insurers rather than asset manager for future deals, and had a preference for whole businesses rather than books of policies.
       Future acquisitions could include "local subsidiaries of foreign insurers and local subsidiaries of banks or large British insurers that may not wish to continue to focus on the UK market," Cowdery said on a conference call.
       Manoj Ladwa, a senior trader at ETX Capital, said potential targets included Scottish Widows, the life insurance business of Lloyds Banking Group, as well as the British life operations of companies such as British insurer Prudential, Aegon of the Netherlands, French Axa, and Swiss Zurich Financial Services.
       The takeover will boost the turnaround efforts of the reinvigorated former mutual and marks a critical first deal for Cowdery's Resolution.
       "We believe the (Resolution) story will become much more interesting as they announce subsequent deals and we are able to gauge what sort of value can be created from cost and outsourcing synergies, asset management synergies and disposals," analysts at Oriel Securities said.
       Resolution and Friends started talks in July but broke them off the same month. A source close to the matter said pressure from shareholders pushed Friends into allowing due diligence only two days later.
       The deal came as Friends posted a 38% drop in first-half underlying profit to ฃ131 million, missing a consensus forecast of ฃ148 million based on seven analyst estimates.
       The group said the outlook for 2009 remained challenging but that it had a strong Insurance Groups Directive (IGD)surplus, estimated at 0.9 billion as of 31 July.