Pearl 'could make merger move'

Life insurance firm Pearl Group could muscle in on an £8.6bn (€12.7bn) merger between rivals Resolution and Friends Provident, it was reported today.

Pearl – Resolution’s biggest shareholder – is seeking a meeting with the board of the UK’s biggest owner of closed life insurance funds to table a £4.5bn (€6.6bn) bid, the Independent on Sunday newspaper reports.

Pearl, which declined to comment, is run by entrepreneur Hugh Osmond. Mr Osmond founded the Punch Tavern pubs group and his previous investments range from restaurant chain Pizza Express to Center Parcs holiday villages.

Mr Osmond’s meeting with Resolution will come as the company embarks on an investor roadshow to discuss the Friends Provident deal, the report says.

But Pearl upped its stake in Resolution to 16% last Friday, which would be enough to block the proposed merger.

The firm has said it does not believe the deal will maximise value for Resolution’s shareholders, and has not ruled out making a bid for Resolution, which would see the company de-listed.

Pearl said last week that it was looking forward to discussions with Resolution’s board over the rationale behind the Friends deal and to explore “alternative opportunities” for the group.

The reported intervention threatens to disrupt the merger to create a new company called Friends Financial, leaving Friends Provident out in the cold.

Friends and Resolution have set out plans to save up to £100m (€148m) through the deal, although Pearl is said to be confident of delivering more savings through a potential takeover.

Pearl has around £28bn (€42bn) worth of assets under management and four million policy-holders.

Resolution employs around 3,500 people, although some 2,000 staff, mainly from customer services and IT departments, based in Glasgow and Birmingham, are already due to transfer to outsourcing group Capita from next month.