Resolution rejects Pearl approach

Source: Exec Digital UK

Date :11/10/2007 14:01:19

Insurer Resolution has said it has snubbed a £4.5 billion approach from rival Pearl Assurance.

Pearl's 660p-a-share proposal attempted to gatecrash an £8.5 billion merger between Resolution - the UK's biggest manager of closed life insurance funds - and life and pensions specialist Friends Provident.

Resolution said Pearl's indicative offer "significantly undervalued" the business and its prospects following the Friends Provident merger, which is due to be approved by Resolution shareholders early next month.

But Pearl, which is Resolution's biggest shareholder with a stake of around 16.5%, said it was "disappointed" by the decision.

It added that the merger would create "limited value for Resolution shareholders and considerable downside risk", highlighting a 2.4% fall in Resolution's share price on the day the Friends merger was announced on July 25.

It added: "The share price performance of both Resolution and Friends Provident immediately following the announcement of the merger suggests that the market shares this view."

Pearl said that its proposed offer had been conditional on a recommendation from Resolution's board. It has agreed to sell some Resolution assets to mutual Royal London for £1.25 billion if the deal goes ahead.

Other insurers linked with a possible bid for Resolution include Standard Life and Axa.

The combination of Resolution and Friends is expected to generate at least £100 million of annual cost savings, although the firms have denied this will lead to major job losses.

Friends Provident, which dates back to 1832, has around 2.5 million life and pensions policyholders, served by some 5,000 staff, at locations including Manchester, Exeter, Dorking and Salisbury.

October 11 2007

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