Insurer Phoenix ends takeover talks with CVC

LONDON (Reuters) - British life insurer Phoenix (PHNX.L) has ended talks on a takeover by private equity company CVC Capital Partners due to differences over the price, causing Phoenix's shares to fall sharply.

The two companies had been in protracted bid talks since November, highlighting the difficulties in reaching an agreement.

"Whilst the board is obliged to consider credible approaches, the terms proposed by CVC did not reflect our view of the full value of Phoenix and its stable, long-term cash flows. As a result, we have mutually decided to terminate these discussions," Phoenix Chief Executive Clive Bannister said in a statement.

Phoenix, formerly known as Pearl, has been hampered by a heavy debt burden taken on to finance the 5 billion pound ($7.9 billion) acquisition in 2007 of a portfolio of closed life funds put together by Clive Cowdery, the founder of insurer Resolution (RSL.L).

Investec analyst Kevin Ryan said this had proved a major stumbling block in any takeover of Phoenix, and that it was unlikely that any other bidders would now emerge.

"The challenge with Phoenix is their capital structure and all that debt. It always looked as if a deal would be hard to pull off," he said.

Phoenix has been in talks with its main banks over relaxing its debt covenants. It is in talks with 14 banks about merging two separate bank credit facilities and altering the timing of repayments scheduled between 2014 and 2016.

Phoenix shares were down 5.5 percent at 538 pence in early morning trade, giving the company a market capitalization of around 940 million pounds.

($1 = 0.6312 British pounds)

(Reporting by Sudip Kar-Gupta; Editing by Jane Merriman and Will Waterman)