Standard Life scrambles to save Resolution recommendation

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Standard Life, the Scottish insurer, was locked in meetings with its advisers at the weekend, attempting to restructure its offer for its rival Resolution, in the hope of retaining the recommendation which it secured from Resolution's board last week.

Resolution recommended Standard's £4.8bn cash and shares offer on Friday, only to receive a slightly higher all-cash offer from Pearl, headed by High Osmond, less than an hour later.

Although Resolution is believed to prefer the offer from Standard, because it believes the Scottish insurer's shares are undervalued and would be in line for a re-rating after a deal was completed, Pearl and its bidding partner, Royal London, have already managed to acquire a 25 per cent in Resolution, which may prove enough to block the Scottish insurer's bid.

Standard Life's offer requires the backing of 75 per cent of Resolution shareholders. However, the management believe that they may be able to restructure their bid, so that they would only need 50 per cent of the vote. Nevertheless, even if Standard is successful here, Pearl claims it would not be able to sell on Resolution's closed life funds to Swiss Re – a crucial part of its plans for the takeover – as this would require 75 per cent shareholder approval.

A spokesman for Pearl said: "Resolution has always stressed that it wants value and certainty. Standard Life's bid is now less value [than Pearl's] and highly uncertain. The pressure is on Standard Life to explain how they could deliver any offerm why they wish to make an offer, and to justify their own track record."

But a spokesman for Standard Life said his company was still in pole position given its recommendation from the board.

It is thought Standard Life is reluctant to raise its offer. However, with Pearl's high stake in the company, it is questionable whether a higher offer would make any difference.

The board of Resolution met yesterday to discuss Pearl's offer, and are expected to make a statement today. Resolution's recommendation of Standard Life's offer, on Friday, put an end to its plans to merge with Friends Provident. Friends will now receive a £49m break fee.