FRIENDS PROVIDENT has rejected a £1.7 billion (€2 billion) takeover approach from Clive Cowdery’s investment firm Resolution.

The 177-year-old insurance group said the bid was too low. Resolution’s offer of 0.8 of a new share for every Friends Provident share was “wholly inadequate”, the insurer said yesterday.

Resolution said it was still considering making a bid, part of which would be in cash.

Friends Provident rose 13 per cent on the news, valuing the company at about £1.6 billion.

Mr Cowdery is making his second attempt to buy the insurer in three years after raising £600 million in December to buy insurers and fund managers.

Friends Provident posted a net loss of £541 million in 2008 after losses on investments more than doubled, and has been limiting sales to group pension and protection products to preserve capital.

“Friends may not end up putting up too much of a fight,” said Peter Eliot, a London-based analyst at MF Global Securities, who has a “buy” rating on Friends Provident.

Mr Cowdery is using the money he raised in the December initial public offering (IPO) to buy insurers and fund managers weakened by the financial crisis.

The Guernsey-based company plans to sell on the insurers it acquires within four years to larger rivals or take them public.

Mr Cowdery made a £4.2 billion bid to buy Friends Provident in July 2007. The offer foundered when Pearl Group, run by Hugh Osmond, bought Mr Cowdery’s firm for £5 billion in May 2008.

Friends Provident and Resolution share many institutional investors who are likely to back Mr Cowdery, Mr Eliot said. Lloyds Banking Group plc is the biggest single shareholder of Resolution and Friends Provident, according to Bloomberg. – (Bloomberg)