US buyout firm JC Flowers has said it will withdraw its £3.5 billion ($6.9 billion; €4.4 billion) bid for UK life insurer Friends Provident on Friday if the company does not allow it to begin due diligence.
Flowers said in a statement: “Despite several attempts by JC Flowers to engage the board of Friends Provident in discussions over several months, Friends Provident has not been willing to do so.”
Flowers said it would not increase its bid from £1.50 per share. Shares in Friends Provident were down nearly 15 percent on last week, trading at £1.18 per share at 0930 BST.
The declaration it will not bid ensures JC Flowers cannot raise its bid for another six months under UK Takeover Panel rules. Should Friends not open its books to a bid by Friday it will be unable to acquire the company.
The Flowers ultimatum implies there will be no deal unless shareholders pressure the board to open its books. Friends said in a statement on 31 March the Flowers bid undervalued the company and so it would not open its books for talks. The company spokesman said: “Our position has not changed since then.”
JC Flowers’ decision echoes its move in December to draw a line at the level it would bid for struggling bank Northern Rock citing grounds of price. The firm’s move was vindicated after the UK government opted to nationalise the bank in February, despite higher bids by a consortium led by Richard Branson’s Virgin Group and another offer by investment firm Olivant.