EMBATTLED insurer Friends Provident will this week reveal plans to break itself up and sell its European wealth-management business and 53% stake in F&C Asset Management.

Friends, chaired by Sir Adrian Montague, is expected to say on Thursday the group will be restructured to concentrate on its core life and pensions business.

The move comes after the beleaguered life insurer was forced to launch a strategic review in October after its planned £8.4 billion merger with closed-life funds group Resolution collapsed. Friends’ board is due to meet on Tuesday to approve the break-up plan.

It is being stalked by JC Flowers, the US private-equity group run by former Goldman Sachs banker Christopher Flowers, which has built up a 2.7% stake.

Bankers said JC Flowers had indicated it could pay about 175p per share, valuing Friends at £4.1 billion. However, the board is understood to value the business at more than 200p per share. On Friday, Friends’ shares closed at 165p.

Advisers to the two companies are understood to have had brief talks last week, but Friends’management has told the private equity group it wants to reveal the results of its strategic review before looking at the possibility of takeover talks.

Bankers said the insurer had received two informal approaches in the past three weeks.

Friends is also close to appointing a new chief executive to succeed Philip Moore, ousted after the Resolution deal failed.

The short list is believed to have been whittled down to two candidates. Trevor Matthews, the head of Standard Life’s UK life and pensions business, has been approached and initially appeared to rule himself out.

Andrew Palmer, finance director at Legal & General, is also seen as a possible candidate for the top job at Friends.

The break-up will leave Friends as a pure life and pensions provider, though it may consider carving out and selling parts of its protection business.

Some bankers believe this could make the group more efficient as well as making it more attractive to a bidder.

Lombard, the international arm for wealthy customers, could be worth about £700m.

The 53% stake in F&C is valued at £491m. Smaller international operations may also be sold.

A number of companies are believed to have contacted Friends about acquiring Lombard.

Potential bidders are also circling for F&C. These could include Aberdeen Asset Management, run by Martin Gilbert.

F&C’s management is also working on plans to buy out the group and has held talks with a series of private-equity firms.

Friends has been in turmoil for the past 10 months, after it admitted it would miss ambitious growth targets for new business.

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