Flowers' Friends bid could be ploy to withdraw gracefully, says top investor

A leading Friends Provident shareholder believes the latest JC Flowers bid for the group may be deliberately undervaluing the company to allow it to 'withdraw gracefully.'

The fund manager, who is AA-rated by Citywire but asked to remain anonymous, said he sees a contrived move to bow out as one of only two explanations for the 150p per share cash bid today.

The bid represents a premium to the market but would have forced the insurer to slash its dividend; something Friends would have been unlikely to consider.

The manager said that if Flowers is serious about pursuing the bid he is likely to return with a new bid 10p higher in the near future.

He  admitted to being confused by the motives behind JC Flowers'  latest offer, its third for the UK insurer, which he called  'murky.'

He said: 'Flowers has waged its battle through the press and it is hard to see what their game is.'

'There are two schools of thought. Either they pitched a bid so low it would clearly be rejected so it can withdraw gracefully, or it pitched a bid which it might  raise by 10p or so and  take its chances. '

He said: 'I met the board of Friends Provident at the time they announced their restructuring and I think the intentions of JC Flowers are a bit murky. I don't quite know what they are up to.'

At 1pm on Monday, Friends shares were trading up 2.91% or 3.5p at 123.6p.