No Resolution for Standard Life as Pearl blocks takeover bid

31 October 2007
Pearl Group – Resolution’s biggest shareholder – has rejected its rival’s takeover bid for the life funds specialist.

Last week, Edinburgh-based Standard Life offered 517p in cash and 0.715 new Standard Life shares in an acquisition bid for Resolution, valuing the company at approximately £4.9 billion.

At the time, a statement said that the board of Resolution “unanimously recommends Standard Life’s offer” with chairman Clive Cowdery, saying, "we believe this transaction represents an attractive balance for Resolution shareholders, who will receive a substantial proportion of their investment in cash while retaining an equity interest in the value expected to be delivered from the enlarged group.”

But, just prior to the bidding deadline the Pearl Group, which already owned 16.5 per cent of Resolution’s shares, stepped in, offering 720p a share (£4.93 billion). The group also upped its stake in the company by 7.7 per cent to become the largest shareholder and in a position to block the Standard Life offer.

Yesterday, it emerged that Standard Life was reprimanded by the Takeover Panel over its bid following reports the firm has flouted takeover rules, and reports suggested that Resolution had withdrawn its earlier support of Standard Life’s bid.

Today, the Pearl Group has done what was widely expected; using its position as the largest shareholder coupled with the fact that Standard Life needs a 75% shareholder backing, it has rejected its rival’s bid, telling Standard Life to either come up with a different proposal or walk away.

In a statement, the Pearl Group said: “Pearl confirms that it will vote against the resolutions to implement the Scheme {Standard Life’s bid} on the current terms. As a result, because of the size of Pearl’s holding in Resolution, Pearl believes that the Scheme is in practice incapable of becoming effective.

“Therefore, Pearl believes it is incumbent on Standard Life to clarify immediately for all

Resolution shareholders whether or not it will restructure its offer, and if so how.

“In the meantime Pearl maintains a dialogue with the Board of Resolution with respect to

Pearl’s increased cash offer, which is of higher value and considerably more certain.”

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