Merger news hits Friends shares

Friends Provident share price Resolution share price

Shares in insurer Friends Provident flip-flopped after the firm changed the terms of its merger with Resolution to make it more likely to go ahead.

The news initially boosted shares but they closed down 1.6% at 169.2 pence.

The main change is that only owners of 50% of Resolution's shares will have to back the deal, down from 75%.

The all-share deal has been criticised by some investors, including Resolution's biggest shareholder Pearl, which said it might make a rival bid.

Resolution shares fell 1.3% to 617.5p.

The insurers confirmed that they expected to save £100m in cost savings and financial synergies per year as a result of the merger.

"The restructuring of the merger is in the best interests of our shareholders as a whole, as it allows the transaction to proceed without disruption, in the absence of any competing offer for Resolution," said Resolution's chief executive Mike Biggs.

The deal to create a single company called Friends Financial with a market value of about £8bn was announced at the end of July.