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Phoenix Weighs CVC Takeover After Talks End With Resolution

Phoenix Group Holdings (PGH), the U.K.’s biggest manager of closed life insurance funds, said it’s considering a bid from CVC Capital Partners after takeover talks with Resolution Ltd. (RSL) ended.

The insurer has also received “certain other approaches,” without naming firms or providing a price, it said in a statement today. London-based Phoenix has market value of 950 million pounds ($1.5 billion).

Phoenix, which buys life insurance policies and profits by releasing capital from them as they mature, has fallen 27 percent in the past six months as investors speculated the European debt crisis may make rolling over its 2.4 billion pounds of debt more difficult. About half of the debt, taken on when Phoenix bought Resolution Plc in 2007, is due in 2014.

“The board is obliged to evaluate any proposals that are received, and will update shareholders as appropriate,” Ron Sandler, Phoenix’s chairman, said in the statement.

Phoenix was forced to hand over equity stakes to its lenders, including Lloyds Banking Group Plc (LLOY), as the credit crisis roiled markets immediately following its 5 billion-pound purchase of Resolution in 2007. Resolution’s founder Clive Cowdery, a former insurance salesman, made a personal fortune of more than 100 million pounds in that deal, having built the business by buying and merging closed life insurance divisions, or zombie funds.

Second Resolution

Resolution Ltd., Cowdery’s second company by the same name, offered to pay about 1.2 billion pounds for Phoenix, about a quarter of the price Cowdery received for the firm in 2007, the Sunday Times reported yesterday. Those takeover talks have now ended, Resolution said today.

“Strategically, this would have made sense for Resolution given the cash generation from Phoenix,” said Eamonn Flanagan, a Liverpool, northern England-based analyst at Shore Capital Group Ltd. “However, it does come with baggage, namely 2.4 billion pounds of net debt.”

Phoenix rose 11 percent, the most on record, to 548 pence at 8:50 a.m. in London trading. A 1.2 billion-pound offer for the company would value its stock at about 700 pence a share.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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