J.C. Flowers Says It May Bid for Friends Provident

J.C. Flowers Says It May Bid for Friends Provident

Jan. 21 (Bloomberg) -- J.C. Flowers & Co., the U.S. leveraged buyout company, may bid for Friends Provident Plc after it bought a 2.7 percent stake in the U.K. insurer.

The buyout firm ``intends to approach the board of Friends Provident with a view to developing a proposal that will deliver value for Friends Provident's shareholders,'' J.C. Flowers said today in a statement.

The New York-based company made an offer of 175 pence a share, the London-based Times newspaper reported today, without identifying its sources. An offer at that price would value the company at 4.07 billion pounds ($7.93 billion). Friends Provident, which controls U.K. fund manager F&C Asset Management Plc, will update investors on Jan. 31 on a review of its operations after failing to combine with Resolution Plc in October.

``Friends Provident has some attractive assets so it's unsurprising there is interest out there,'' said Trevor Moss, an analyst at MF Global Securities in London with a ``buy'' rating on the stock. ``It could be broken up and sold in pieces,'' making it attractive to private-equity companies, he said.

Friends Provident rose as much as 16.5 pence in London trading and gained 6 pence to 158.5 pence as of 12:10 p.m., valuing the Dorking, England-based insurer at 3.7 billion pounds. That trimmed the decline in the past six months to 21 percent. The 60-member Bloomberg Europe Banks and Financial Services Index declined 4.3 percent today.

Shinsei, Sallie Mae

``There are lots of possibilities here for a consolidator like J.C. Flowers,'' said Kevin Ryan, a London-based analyst at ING Financial Markets. The company run by former Goldman Sachs Group Inc. banker Christopher Flowers may focus on the U.K insurer's protection and pensions divisions and sell the company's fund-management units, Ryan said.

J.C. Flowers completed in 2000 the takeover of near- bankrupt Long-Term Credit Bank of Japan with Ripplewood Holdings LLC founder Tim Collins. They renamed the Tokyo-based bank Shinsei before taking it public in February 2004 for a $7 billion gain.

SLM Corp., the top U.S. student-loan provider known as Sallie Mae, is suing a group led by J.C. Flowers to try to get a $900 million breakup fee after a takeover fell apart. The investors had sought to rescind an agreement to buy the company for $25.3 billion, citing adverse financial developments.

Friends Provident, whose Chief Executive Officer Philip Moore stepped down in November, may be looking for offers above 200 pence, the Times said. The company scrapped plans in August to raise about 500 million pounds needed to finance growth.

Spokesmen for J.C. Flowers and Friends Provident declined to comment.

In December, Friends Provident said investors won't be able to withdraw money from a 1.2 billion-pound U.K. property fund for as much as six months to give the company more time to sell buildings.

BLOOMBERG