British insurance group Standard Life confirmed today it is looking at gatecrashing the £8bn (€11.4bn) merger of Resolution and Friends Provident.
Edinburgh-based Standard said its interest involved a possible cash and shares offer for Resolution, the UK’s largest specialist manager of in-force life funds.
While Resolution and Friends Provident have got as far as posting documents on their merger to shareholders, the deal has been dogged by reports over opposition from investors and the potential for competing bids.
Pearl Assurance, which owns around 16% of Resolution, is also said to be considering an all-cash bid of its own having been vocal in its opposition of the Friends deal. Swiss Re and Axa have also been linked to possible interest.
But Standard Life revealed today it was looking at becoming involved, although no decision has been made on a potential offer.
It said: “Standard Life confirms that it is monitoring the announced proposed merger between Resolution and Friends Provident and is considering the possibility of a cash and shares offer for Resolution, which might possibly include disposals of certain assets.
“Any offer would only be made if the Standard Life board considered it to be in the best interests of Standard Life shareholders.”
The Times newspaper said today it believed that Gerry Grimstone, Standard Life’s chairman, had held several informal meetings with Clive Cowdery, his counterpart at Resolution, including as recently as last week.
The newspaper said that Standard, which is the UK’s fifth-largest insurer, is understood to have sought access to financial information on Resolution that is available only to credible potential bidders.
A deal would give Standard Life access to seven million policyholders and a fund manager with £57bn (€81.6bn) of assets. Resolution, which is currently valued at around £3.5 billion (€5bn), would benefit from being part of a company that is still actively writing new policies.
Standard Life shares rose 3%, while Resolution gained 5%. Friends Provident shares lifted 2% as analysts said the break up of its merger with Resolution could leave it exposed to an outright bid for the company.
The agreed deal involving Resolution and Friends Provident would create a group called Friends Financial, with hopes to save £100 million (€143m) a year by the end of 2010 in benefits of combining the businesses. It would also be a leader in the group pensions market and a top three player in the insurance sector.