Friends Provident has reportedly caved in to takeover offers from investment firm Resolution with news of a £1.86bn deal struck between the two.

Several previous offers had been rejected by the life and pensions group, but this new agreed deal will see investors receive 0.9 Resolution shares for each one in Friends Provident. A cash alternative will, according to the BBC, be offered to smaller shareholders for their shares.

The news ties in with Friends Provident's publication of its results for the first half of 2009, which showed an improvement in life and pensions gross cash generated from £19million in 2008 to £35million. IFRS underlying profit also increased from £13million in 2008 to £38million in 2009.

New life and pensions business was £319million annualised premium equivalent for the first half, with the second quarter outstripping the first by 15 per cent.

Trevor Matthews, chief executive officer, said; "We are excited by the prospects for our business as the foundation for Resolution's consolidation and restructuring strategy for the open businesses in the Life and Asset Management sectors. Resolution is supportive of our current strategy and turnaround plan."

He said the last 18 months have seen a reshaping and refocusing of the business, placing them in a good position to participate in industry consolidation.

"We sum up our existing organic growth strategy in just four words: 'Fix UK, Build International'. To this end, we have secured our targeted cost savings and have created an efficient platform capable of handling significant new business volumes making us an attractive distribution partner both in the UK and overseas."

Matthews admitted that trading conditions had been "tough", although the group is making headway in new schemes on nil or funded commission terms. However, he said there were time lags, exacerbated by the recession, when it comes to taking part in tenders to win schemes and improve business volumes.

He added that the F&C demerger "represented a further significant achievement and bolsters our already strong capital position".

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