UK - Resolution and Friends Provident have changed the shareholder agreement required for the merger of the two life insurance groups and this might make it more difficult for rival bidders, analysts say.

Under the new deal, 50% of Resolution shareholders have to agree to the merger to become Friends Financial, while 75% of Friends Provident shareholders have to give their okay.

This is a reversal of the old requirements under which 75% of Resolution and 50% of Friends Provident shareholders had to agree.

"In effect, this makes it easier for the deal to go through and the involvement of rival bidders less likely," Tony Silverman, equity insurance analyst from Standard & Poor's equity research team, explained to IPE.

However, Mike Biggs, group chief executive of Resolution, stressed: "We remain relentlessly focused on maximising value for shareholders and nothing in this restructuring will inhibit anyone from making such a competing offer.

"It is a meaningful change, not only a technicality, and it could be interpreted as motivated by changes in the market," he added.

When the deal was first announced during the earlier bull market, commentators suggested there might be a rival takeover bid for Friends Provident, however, it is now seen as more likely someone might bid for Resolution.

A possible candidate is Pearl Assurance who recently received permission from the Financial Services Authority (FSA) to up its stake in Resolution to 20%.

In a joint statement today, Resolution and Friends Provident also said "asset management will remain central to Friends Financial's strategy". Their combined funds under management were £165bn (€242.9bn) at year-end 2006.

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