After months of approaches, Friends Provident is recommending a takeover by Resolution to its shareholders.

Resolution was set up by Clive Cowdery with the intention of buying paid-up or "zombie" funds from insurers that no longer wanted them. Following the sale of this business to the Pearl for £5bn, Cowdery kept the rights to the Resolution name and now focuses on buying insurance and finance companies that are finding it difficult to survive in the new financial climate.

Friends Provident has around 740,000 shareholders, many of whom received shares from the privatisation of the company. Resolution is offering 0.9 of its own shares for each Friends Provident share. This values the shares at 79.4p, much less than their 225p value when the company was privatised. If a shareholder wants cash instead of shares, they will receive 84.5p up to a maximum of 2,500 shares.

Shareholders will receive details in the next month directly from Friends Provident.

So what should you do?

The only winner here will be Cowdery. He will no doubt continue to acquire struggling companies, and then sell the lot in the future. If you take Resolution shares you will probably see their value increase in the short term, but you will be unlikely to make a fortune. If you have a larger holding, then you should consider if this new holding matches and complements your portfolio. If you are a smaller stockholder, I would probably just take the cash and have a very expensive meal out.