It appears that former favourite in the race to acquire Resolution, Standard Life, may have to rethink its 4.9 billion offer after its proposal was beaten by rival bidder Pearl Group on October 26. Reports indicate that closed life fund company Resolution has retracted its support for Standard Life’s bid.
Resolution pulled out a merger deal from Friends Provident last week in favour of the proposed takeover by Standard Life/Swiss Re, which was offering 517p in cash and 0.715 Standard Life shares for every Resolution share. And the deal looked all but done when the Pearl/Royal London partnership stepped in.
Pearl offered 720p a share (£4.93 billion) just prior to the bidding deadline and the company – which already owned 16.5 per cent of Resolution’s shares – also upped its stake in the company by 7.7 per cent. As the largest shareholder, it could now potentially block Standard Life’s offer, which requires the backing of 75 per cent of shareholder capital.
Edinburgh-based Standard Life may now have to restructure its bid to a conventional deal, which would require only 50 per cent approval.
However, it could still face obstacles in achieving this end. The company may be unable to delist Resolution as previously planned, and could also struggle to access the £2.3 billion in cash offered by Swiss Re, which was to take over certain assets once the deal was in place.
Pearl has expressed criticism over Standard Life’s acquisition proposal, which owner, Hugh Osmond, described as “poorly conceived”. Only time will tell as to whether Standard Life will submit a new and improved offer, or whether it will eventually be pipped to the post by Pearl.
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