Pearl’s Resolution offer looks set to shine

19 November 2007
The management boards of closed life funds firms Pearl and Resolution have agreed to the terms of the Pearl acquisition. The deal will see Resolution shareholders receive 720p per share, valuing Resolution at approximately £4.98 billion.

This is 1.2 times the company’s tangible embedded value per share of 602p and will create a combined group with assets of £85 billion, reportedly making it a top ten UK life insurer.

Pearl has made it clear that the Resolution management team will continue to be involved in running the enlarged group. The group is currently Resolution’s largest shareholder with a share of approximately 25.93 per cent.

“We wish to combine the proven strength and expertise of both teams to create one organisation capable of delivering far more than either of its constituent parts. We believe that this will herald a bright future for policyholders, shareholders and employees of the combined group,” said Pearl CEO, Hugh Osmond.

As anticipated, Royal London will have the right to acquire some of Resolution’s business and assets once the acquisition is complete. The total amount payable for these assets will be £1.267 billion subject to post-closing adjustments.

Standard Life, led by Sandy Crombie, has been struggling to defend its actions following the company’s failed bid for Resolution. Its £4.9 billion offer was beaten by Pearl’s, and Standard Life subsequently decided not to restructure its bid. Rules surrounding mergers and acquisitions currently prevent Mr Crombie from explaining his decisions as the company’s formal offer has not yet lapsed.

Meanwhile, insurance company Swiss Re, which partnered Standard Life in its bid for Resolution, is now set to buy either a part or all of Standard Life's annuity book. Other companies interested in the firm’s pensions segment include Canada Life and Synesis Life.

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