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Friends Provident (FP.) 139.9p, F&C Asset Management (FCAM) 182.5p

Life and pensions group Friends Provident is to cut around 600 jobs by 2009 in a £60 million cost-saving exercise, and may sell investment subsidiary F&C Asset Management, estimated to be worth £500 million. (Read the full story: www.sharesmagazine.com/node/3119)

Shares says: Having been left in the cold from the failed merger with Resolution, it was inevitable that Friends Provident would offload F&C to become a more streamlined operation. While that may raise a tidy cash sum, there is still the problem of stopping people cashing in their policies early. Standard Life’s UK boss Trevor Matthews has been poached to become the new CEO. He cannot afford to waste time on a lengthy strategic review as the core day-to-day business needs saving fast. It is already the subject of bid speculation from private equity, which could prop up the share price. HOLD Friends Provident, F&C

The City - Landsbanki says: Potential buyers of F&C may be put off by the need to integrate ‘fragmented’ systems, despite the chance to acquire £100 billion of assets under management in ‘one fell swoop’. Private equity groups may be open to bidding if sufficient cost synergies can be achieved. Dawney Day needs to clarify its intentions over having a 17.6% stake.

REDUCE F&C

The City - Barclays says: Friends Provident new business numbers looked slightly short of expectations, posting premium growth of around 8%. Its decision to focus on life and pensions means Lombard, F&C and Pantheon Financial are up for sale as they ‘no longer fit within the group’. Lombard has just posted poor new business numbers and asset managers are trading poorly. We think this could be a difficult time for the restructuring.