Edinburgh-based Standard Life has offered 517p in cash and 0.715 new Standard Life shares in an acquisition bid for Resolution. This values the company at approximately £4.9 billion.
If the deal goes through, Standard Life will become one of the UK's largest life and pensions companies with approximately seven million customers. It will also increase its strength in pensions and protection, with an enhanced annuity position and continued leadership in SIPP (self-invested personal pension) and Wrap accounts.
Standard Life will retain almost all of Resolution's new business capability which for the first half of 2007 generated PVNBP (present value of new business premiums) of £448 million and new business contributions of £30 million. The company will acquire EEV (European embedded value) of approximately £2 billion.
Should the bid be accepted, Swiss Re will acquire some of Resolution's businesses and assets including Phoenix Life, Phoenix Pensions,
Phoenix and London Assurance and Resolution Management Services, for a purchase price of £2.35 billion in cash.
As Standard Life will own Resolution Asset Management, Swiss Re has agreed to continue existing investment management arrangements with Standard Life for ten years, after which Standard Life will manage £24 billion worth of assets.
Chairman of Resolution, Clive Cowdery, said: "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.”
“The board of Resolution, therefore, unanimously recommends Standard Life's offer," he said.
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