Standard Life 'may never get to the stock market'

Prudential and Axa could make bids for pensions giant, with price tag up to £5bn
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Bidders are starting to eye up Standard Life, with speculation growing that the Scottish pensions provider may be taken over before its planned flotation this summer.

Senior figures in the financial services industry said they expected a bid, valuing Standard at up to £5bn. "I would not be surprised if it does not make it to market," a senior executive at a rival institution said.

Among potential buyers are the French insurer Axa, Great-West Lifeco of Canada, US pensions group The Hartford and Prudential.

The Pru may be reluctant to make such a big move so soon after running into trouble with investors over a £1bn rights issue late in 2004. This led to the departure of its chief executive, Jonathan Bloomer, who was replaced by the group's former Asia chief, Mark Tucker.

Axa, which owns Sun Life in Britain, has long held ambitions to expand further in Britain, while Great-West Lifeco, which owns Canada Life, and The Hartford, which is one of the largest pensions providers in the US, have both said they want to buy into the UK market.

Any bidder would have a small window of opportunity to strike a deal. Standard Life, which said in 2004 that it was giving up 180 years of mutuality, will send out a prospectus to its 2.4 million members in April or May ahead of a demutualisation vote in June.

This document is critical, as the market is currently in the dark about many details of Standard's financial operations.

"What everyone will want to see is the numbers and the structure of the business," said Ned Cazalet, an independent life assurance analyst.

If, as expected, Standard's members vote to become a plc, the flotation will happen just a few weeks later.

Standard is aiming to have as wide a shareholding base as possible after its float, offering discounted shares to members, which it sees as potentially the best protection against an unwanted bid.

Unless the Standard team, led by its chief executive, Sandy Crombie, agrees to an offer, it will be hard for a rival to mount a bid.

But life assurance analysts expect there to be interest. Greig Paterson at US broker Keefe Bruyette & Woods said that Standard had "a very good asset management operation, a good pension franchise, great IT and one of the best tie-ups in India [through its joint venture with HDFC]". He suggested Pru-dential would be the best fit with Standard.

Mr Cazalet said: "Certain organisations will look at Standard Life and some of them might be tempted."

Standard said it had received no bid approaches and was proceeding as planned with its float.

However, analysts have expressed concerns about how smoothly Standard's flotation will go, as the firm has not been enjoying much success in winning new business, a key measure for quoted life assurers.