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Standard Life leaves Pearl to pursue Resolution

UK - Insurance and investment firm Pearl Group is one step closer to a merger with rival firm Resolution Group as Standard Life has now pulled out of talks to buy the asset house.

Standard Life this morning confirmed to the London Stock Exchange it has withdrawn its earlier push to merge with asset manager Resolution, arguing it was unable to see value for its own shareholders if it offered a fresh repackaged merger deal to beat that of Impala Holdings Ltd, a division of Pearl.

A decision from Standard to pull out of the Resolution deal will be of little surprise, as investment sources had suggested it would have been virtually impossible for Standard Life to gain 75% shareholder approval from Resolution's investors for its £4.9bn (€6.95bn) offer, after Pearl had bought almost 25% of the firm's equities prior to this morning's announcement, in a bid to scupper a merger between the two firms.

Since then, Pearl has bought more shares and announced Impala now holds 25.93% of Resolution's issued capital, while Resolution has confirmed it "continues to engage with Pearl Group" concerning its 720p a share all-cash offer.

Having been created in April 2005, Resolution Group is largely made up of a mixture of closed-book investment-based insurance funds and retail asset management operations, but contains several boutique operations within the group.

Pearl is also predominantly a manager of closed book investment and insurance funds bought from life insurance houses, but also has an in-house asset management division known as Axial, headed by chief investment officer Jan Straatman, former capital markets head at Dutch pension fund ABP.

If Pearl secures a deal to buy Resolution, it will then sell some of the group's operations, including the Scottish Provident open book business, to Royal London for £1.25bn.

This latest instalment in the Resolution saga follows an earlier agreement between Resolution and Friends Provident plc, parent group of F&C Asset Management, to merge the two firms as Friends Financial. However, this deal was also scuppered largely by constant activity from Pearl and Standard Life to intercept merger plans.

Resolution had faced a £49m fee for breaking the deal with Friends Provident, but Standard Life agreed to pay this on their behalf at the time it went into talks.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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