No Resolution for merger with Pearl as FSA delays proceedings

12 February 2008 / by Joy Tibbs
The Financial Services Authority (FSA) is questioning Pearl Assurance's prospective takeover of Resolution, which could delay the process by another three weeks. Resolution shares fell sharply on February 11 amid fears that the deal could be cancelled all together. The merger, which was penned last November, is worth £5 billion.

Although the FSA has approved the acquisition, it is concerned that policyholders may be negatively impacted by the timing of the distribution of capital from Resolution's life funds once the deal is complete. This setback follows previous delays over legal stipulations and necessary clearance procedures.

Despite rumours that life insurance provider Pearl may be backing out of the deal, investment management firm Resolution said in a statement that it expects the acquisition to be complete by mid March, providing there are no further delays. The original takeover date had been set for the beginning of February.

The deal continues to be worth 720p in cash per Resolution share, despite the unforeseen setback. However, the FSA is within its rights to impose new conditions relating to the acquisition and post-completion capital withdrawal.

Controversial from the start, a previous takeover bid by Friends Provident was blocked by Pearl – Resolution's largest shareholder – last year. Resolution founder, Clive Cowdery, and Pearl CEO, Hugh Osmond, are said to have been bitter rivals for some time. It is believed Mr Cowdery will leave Resolution once the deal is fully complete.

© Fair Investment Company Ltd