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Daily Insurance Industry News
Tuesday 20th of February 2018
August 2, 2007

Pearl stalks Resolution merger plans

by Gill Montia

Story link: Pearl stalks Resolution merger plans

Closed life fund manager, Resolution, has been defending its planned merger with Friends Provident after Pearl, a major shareholder, increased its ownership of Resolution to almost 16% by acquiring shares and derivatives.

The move by Pearl, which like Resolution has specialised in consolidating closed life funds, has sparked rumours that it may seek to block the £8.6 billion merger.

However, Resolution has responded by saying that it can restructure its agreement with Friends Provident to prevent such a move.

Under the terms of the current agreement, Resolution shareholders will get 3.25 new Friends Financial shares for every Resolution share owned.

According to Resolution, Pearl is a competitor and should therefore not be able to block a merger that will benefit other Resolution shareholders.

If a merger is to proceed, Resolution needs 75% of shareholders to approve it, but if the agreement is restructured as a takeover of Friends Provident, the level of shareholder approval drops to 50%.

Pearl has plenty of time to respond to Resolution’s defence strategy because documentation on the merger will not go out shareholders until September, after its interim results have been published.

It is not yet clear whether Pearl is seeking to block the merger or whether it could be preparing a bid for Resolution, which is currently valued at £4.4 billion.

 

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