Phoenix mulls new offer as Resolution drops out

Phoenix Group, the closed ended fund consolidator, is considering a takeover offer, believed to be around £1bn, from private equity firm CVC Capital Partners after a bid from rival Resolution fell through.

The Sunday Times had reported Resolution was close to clinching a £1.2bn all-share takeover of Phoenix, representing a 40% premium to its closing price on Friday.

However, in a statement yesterday Clive Cowdery's Resolution said it had held talks with both Phoenix and its lending banks before deciding against going ahead with an offer.

Resolution said: "As part of its UK Life Project, Resolution continually investigates a variety of bolt-on opportunities. Any acquisition must have a strong financial case and enhance returns to shareholders. The hurdle to executing any particular transaction is therefore high."

Phoenix Group, which was formed from businesses controlled by Cowdery's rival  entrepreneur Hugh Osmond, said talks with Resolution had "terminated" and it was now con­sidering whether the CVC offer was "appropriate to ­recommend to Phoenix's ­shareholders".

A source close to the situation said the talks with CVC were at an "early stage" with the buyout firm understood to be looking at making a cash offer for the company that would value it in excess of £1bn.

According to the Telegraph, there was speculation Phoenix had come under pressure from bondholders to do a deal, but a source close to the company said debt investors were happy with the group's progress.

However, Ron Sandler, chairman of Phoenix, said the company had a "resilient business with robust and predictable long term cash flows".

"The board believes that Phoenix is in a strong position to deliver substantial value and has a compelling business model," said Sandler.

Osmond is Phoenix Group's second largest shareholder with a 17.4% holding, putting him 2% behind Manjit Dale, the founding partner of private equity firm TDR Capital.

In 2007, the company, then known as Pearl, paid nearly £5bn to buy Cowdery's old business Resolution Life. The complex debt structure behind the takeover came unstuck in the credit crunch leading to a debt restructuring deal and a new injection of equity from US insurance industry billionaire Nicolas Berggruen.

Phoenix Group shares have lost about 20% of their value this year.

The group is the UK's largest specialist consolidator of closed life funds with over six million customers and £67.5bn of AUM in its wholly owned asset management business, Ignis Asset Management.