Friends Provident & Resolution – Update

Friends Provident shareholders have until Friday 30th October to return their forms to the company, stating whether they wish to accept the cash offer or shares in Resolution plc.

Shareholders can receive 79.4p for each FP share (up to the first 2500 shares in their holding) and 0.9 new Resolution shares for the remainder of their holding. 

Or, they can receive all shares, at the same rate of 0.9 Resolution shares per FP share.

So, a holder with 2000 FP shares will have the opportunity to take 1800 Resolution shares, or £1588.

A holder with 3000 shares will be able to take the maximum cash offer of £1985 (for 2500 shares) and 450 Resolution shares (with their remaining 500 FP shares).  Alternatively, they could opt for shares only, receiving 2700 Resolution shares.

What shareholders decide to do will vary, depending on their own set of circumstances.

Firstly, a shareholder will need to weigh up the potential of Resolution.  As a new player in the market, with the stated aim of consolidating the Life Assurance industry, there is little in the way of a relevant track record to look back upon, but there are ambitious plans for the future.  

As ever, diversification should be a key driver in the decision making process.  Is your portfolio of shares spread across a wide range of companies and industries, in order to mitigate risk?  Or do you have a strong view on a particular sector? 

Do you only hold FP shares after being awarded them after demutualization?  If so is direct equity investment a worthwhile venture – would you be better off in a managed fund or ETF if you want stock market exposure? 

Read our guide to ETF’s here.

If you think the market has come too far recently and is due a fall, maybe you want to hold cash.

Read our article on Cash ISAs here.

A key issue to be clear on regards shares held in nominee.  Most online stockbrokers will hold shares in nominee accounts (ie held in their name rather than yours).  They may have different deadlines to those published by Friends Provident (as they have to process many instructions from all of their clients who hold FP and advise the company in good time). 

If you do not hold the shares yourself in certificated form, make sure that you find out from your stockbroker what their deadlines are for this offer.

As ever, the only advice we offer is to research as thoroughly as you can, carefully consider all of your options and, if required, take independent financial advice.

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