Pearl could counter-bid for Resolution within days

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The Independent Online

Hugh Osmond's Pearl could launch a counter-bid for Resolution, the life insurer, within days after the latter set out the timetable yesterday for its preferred merger with Friends Provident.

Resolution said it had asked the Takeover Panel to set a timetable for potential counter-bidders to "clarify their intentions" to try to force the hands of Pearl – which holds a 16 per cent stake in Resolution – and of Standard Life, which has said it is considering its options.

The two could work together on a break-up of Resolution, with Standard keen on parts of the company that still generate new business and Pearl wanting Resolution's closed life insurance operation.

Resolution and Friends said they planned to hold an extraordinary general meeting on 5 November to allow their shareholders to vote on the deal, with 29 November set as the day for the transaction to become final.

In a statement, the two companies said: "The boards of Friends Provident and Resolution remain committed to the merger, which they believe to be in the best interests of the shareholders of each company, and continue to recommend that their respective shareholders vote in favour."

Resolution noted it had opened its books to potential rival suitors but had yet to receive an offer.

Yesterday its shares finished the day down 12.5p at 682p, while Friends eased 0.2p to 173.7p.

Sources close to Pearl noted there was no explanation of the terms of the merger between Resolution Asset Management and F&C Asset Management, Friends' majority-owned subsidiary, in the deal. "That amounts to around a quarter of the £100m a year synergies and yet there is nothing about the terms, which is pretty crucial," one source said.

Pearl is expected to closely study the offer document before making its move. However, it is expected to declare its hand within a matter of days now that the phoney war is in effect over, with Resolution and Friends' posting of their merger document.

Pearl has already said it is considering a cash bid, funded by borrowing against future revenues from the two companies.

However, the company has warned those expecting a knockout price that it believes "the current market price of Resolution to have been affected by press and market speculation regarding possible offers for Resolution". The highest price paid by Pearl for Resolution shares in the past six months is 660p.

Friends said in the third quarter it performed "in line with expectations", with total life insurance and pension sales for the nine months to 30 September up 16 per cent at more than £5.4bn.