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Friends Life reassures investors after share price drop

Friends Life reassures investors after share price drop

As the stock price of Friends Life fell ahead of Friday’s takeover by Aviva, the firm reminded investors that ordinary shares will be entitled to receive the second interim dividend of 24.1 pence in a statement on the London Stock Exchange.

This morning the share price plummeted almost 6 per cent, before recovering this afternoon to around 432p per share at the time of going to press.

At the end of March, an overwhelming majority of Aviva shareholders approved the proposed acquisition, following an initial announcement of the £5.6bn deal in December last year.

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The acquisition plan saw Friends Life shares valued at 394p, including the second dividend of 24.1p, and the company subsequently being rebranded as Aviva. After the deal was announced, Aviva’s share price fell by 3.9 per cent.

A statement from Friends Life noted today’s share price movement and added that, as disclosed in the scheme document published on 19 January, all ordinary shares on the register as at 6pm on 9 April will be entitled to receive the second interim dividend.

Friends Life shares should not trade ex-dividend ahead of that time and date.

It is intended that dealings in the firm’s ordinary shares will be suspended from 7.30am on 10 April, in anticipation of the acquisition by Aviva becoming effective.

Ian Forrest, investment research analyst at The Share Centre, said that it may well have been a mistake that the market pounced on, thinking that Friends Life had gone ex-dividend, only to be reminded that the ex-dividend date is actually tomorrow evening.

“It’s all very strange, my only thought is that it might be connected to the fact that Aviva also went ex-dividend a day early, which is quite unusual,” he added.

Shareholders of Friends Life will own approximately 26 per cent of the enlarged group under the terms agreed.

The Unite trade union, which represents around 4,000 members across both companies, warned Aviva against job cuts as a result of the transaction and demanded an “urgent” meeting with the board to reassure staff that the pursuit of cutting costs will not be the outcome.

peter.walker@ft.com