LONDON (AFP) –
British insurer Friends Provident proposed on Friday a takeover of buy-out firm Resolution in an all-shares deal, turning the tables on Resolution which itself is looking to buy Friends Provident.

Four days ago, Friends rejected a takeover bid from Resolution as "wholly inadequate".

"The board of Friends Provident Group has today sent to the chairman of Resolution Limited a letter setting out a proposed structure for effecting a possible combination of the two groups," Friends said in a statement to the London Stock Exchange.

But it added that a tie-up "can only be agreed on terms that are fair to both sets of shareholders and with a structure that is appropriate for the implementation of the combined group's follow-on acquisition strategy."

It went on: "The proposal put forward by Friends Provident envisages that Friends Provident would become the holding company of the combined group, with Resolution shareholders exchanging their shares in Resolution for new shares in Friends Provident."

Friends said on Monday that it had received an all-share offer of 0.8 new Resolution shares for every Friends Provident share.

Friends added on Friday: "Our board has thought long and hard about Resolution's proposal. We recognise the shareholder value which consolidation could bring and we can see the benefits of combining two strong executive teams with complementary skills and experience.

"The potential of the new group will only be realised if we have the right structure from the outset."

-- Dow Jones contributed to this story --