Private equity firm JC Flowers has called for a meeting with Friends Provident, after the troubled UK insurer publicly asked its US suitor to make clear whether it planned to bid for it.
Hopes of an offer boosted the life insurer's battered shares by as much as 8 percent on Tuesday, despite confirmation its 2007 profits had all but been wiped out by one-off charges and that its finance director, Jim Smart, would depart this year.
Friends has been overhauling its strategy since last year, when a planned merger with rival Resolution failed, prompting the departure of its chief executive and posing persistent questions over the strength of its balance sheet.
It said on Tuesday it had received a "stream" of expressions of interest from possible buyers for units it has earmarked for disposal - including a majority stake in asset manager F&C and high-end insurer Lombard - but gave no details.
Flowers said in January, just before Friends unveiled a planned strategy overhaul and possible disposals, that it was considering making an offer. Since then, however, Flowers has kept a low profile, despite speculation of an imminent move. "We would be prepared to discuss a formal approach if one was made to us. All I can say is we have not had a formal approach from Flowers," Friends Chairman Adrian Montague said.
"The point is coming when the uncertainty is not good for anybody, so we would like to call on Flowers to make their position clear," he told reporters on a conference call. Flowers, which owns 2.7 percent of Friends, responded it was open for talks. "We would welcome a chance to meet as soon as possible to discuss our ideas," a spokesman for Flowers said.
The private equity group wrote to Friends last month, seeking a meeting with management. It was told then to speak to its advisers instead, because the approach was not formal. Flowers remains the highest-profile suitor for Friends and reports of an imminent bid, repeatedly played down by sources close to the situation, have boosted the insurer's shares.
But Montague said there were no plans to ask regulators to set a "put up or shut up" deadline for Flowers to make its intentions clear. "It's early days," he said. "If there is a proposition coming from Flowers, we would like to give shareholders the opportunity to look at it, so we would not like to do anything precipitated ... which would not be beneficial to anyone."
At 1426 GMT, Friends, the worst performing stock in the UK life sector over the past six months, was up 5.6 percent at 125.8 pence - well below indications late last year from the Flowers camp that a bid could come in at around 175p.
"The only lifeline would be Flowers coming in to buy. This is quite plausible - Flowers is the consummate turnaround artist," Collins Stewart analyst Tim Young said in a research note. "However, after the profits warning it is highly unlikely that Flowers would pay the previously indicated 175p, let alone the 200-220p that many investors considered reasonable."