Monday July 23, 01:12 PM
British life insurers seek eight-billion-pound merger
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LONDON (AFP) - British life insurance groups Friends Provident (LSE: FP.L - news) and Resolution said on Monday that they were in advanced talks on a merger worth 8.31 billion pounds (12.4 billion euros, 17.1 billion dollars).
"Friends Provident and Resolution believe a merger would create significant value for both sets of shareholders by combining Friends Provident's new business growth opportunities with Resolution's strong cash flow generation," the pair said in a short statement.
The combined company would have a stock market capitalization of about 8.31 billion pounds.
The news sent Friends Provident's share price soaring by 7.43 percent to 200.25 pence in London afternoon trade. Resolution shares gained 0.79 percent to 634 pence.
Resolution shareholders will own 50.9 percent of the merged company and Friends Provident 49.1 percent.
Analysts said the announcement could trigger competing offers from the likes of French insurance giant Axa (Paris: FR0000120628 - news) and peer Standard Life (LSE: SL.L - news) in Britain.
Established in 2003, Resolution last year joined London's FTSE 100 (news) of leading shares after it paid 3.6 billion pounds for an insurance arm of Abbey National -- the British banking subsidiary of Spanish banking group SCH (Madrid: SAN.MC - news) .
The deal gave Resolution an 18-percent share of Britain's life insurance market.
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