UK insurer Friends Provident rejected a 3.5 billion pound (€4.4 billion) cash takeover proposal from US private equity firm JC Flowers because it significantly undervalues the company, Friends said today.
Friends said it received the 150 pence per share indicative proposal last Thursday and JC Flowers had indicated the offer price would be reduced in the event that Friends Provident paid shareholders the 2007 final dividend of 5.3p a share.
Shares in the troubled insurer closed at 120 pence on Friday in a market in which financial shares have suffered as a result of the subprime crisis.
Investors had hoped for a bid of in excess of 160 pence -- the embedded value of the shares reflecting the actuarial value of the company.
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.
Flowers first announced in January that it was considering making an offer for Friends.