(Bloomberg) — Clive Cowdery, the insurance deal maker and founder of Friends Life Group Ltd., said he and his partners may forgo an instant cash payment of about 259 million pounds ($405 million) to remain shareholders of Aviva Plc.
Cowdery, who personally owns a 39 million-pound stake in Friends Life, said he “absolutely” plans to hold Aviva shares after the company yesterday agreed to buy Friends in a 5.6 billion-pound all-stock takeover. He also owns 60 percent of a 220 million-pound stake dating to the insurer’s creation in 2008.
“The reality is this combined company has a 30 percent increase in its dividend and enormous synergies to come,” Cowdery, 51, said in an interview. “We will make our decision before the completion of the deal, but we would be strongly minded to take shares in a fast-growing company.”
Aviva said yesterday it was offering 394 pence in stock for each Friends Life share based on the Nov. 20 closing price, making it the biggest U.K. insurance deal in 15 years. Based on Dec. 1’s price for Aviva, the offer dropped to 370 pence apiece, the statement showed. Friends Life shares surged to the highest level since 2009.
Cowdery said he and the partners from Resolution Group, his insurance buyout firm, had planned to meet with Friends Life Chief Executive Officer Andy Briggs on Jan. 8 to discuss potential exit plans for Friends Life next year.
He also said he had held “preliminary discussions” to gauge interest from various companies for either parts or all of Friends Life, but added that yesterday’s deal was led by Aviva CEO Mark Wilson, 48, who approached them.
“Aviva was clear, focused, hard and early which was key,” said Cowdery. “We have spent 10 years making money from consolidating insurance companies and squeezing out synergies in cash. There is another chance to do that by rolling in as investors of Aviva.”
Friends Life was created in 2008 as Resolution Ltd. after Cowdery and his partners bought Friends Provident, Axa SA’s U.K. life insurance unit and Bupa Health Assurance Ltd. Briggs was hired to integrate the three units after it scrapped its buyout strategy to focus on growth plus cash, a strategy favored by insurers including Aviva.
Cowdery said the Aviva deal completes Resolution’s second life insurance project in the U.K., which he said has generated 3 billion pounds of value for shareholders.