Standard Life and Swiss Re to bid £5bn for Resolution

by Gill Montia

Story link: Standard Life and Swiss Re to bid £5bn for Resolution

This week, Standard Life and Swiss Re, the closed life funds consolidator, are expected to make a £5 billion takeover bid for Resolution, the largest specialist manager of in force UK life funds.

Resolution is currently negotiating a merger with Friends Provident but Pearl Group, its largest shareholder, is opposed to the move.

The Standard Life/Swiss Re offer is understood to be around 70% in cash with the balance in new Standard Life shares.

Resolution’s fund-management business contain an estimated £60 billion in funds and Standard Life is interested in acquiring both this part of the business and Resolution’s protection insurance operations, which include a distribution and sales agreement with Abbey.

Swiss Re would take over Resolution’s closed business that is to say its life-assurance funds that no longer write new business.

However, the bid is likely to meet opposition from Pearl Group, which already holds a 16.5% interest in Resolution.

The group made a £4.7 billion offer for Resolution last Friday, which was immediately rejected as undervaluing the business.

Both Standard Life and Swiss Re are likely to fight hard for Resolution as Standard Life can probably pay more for the protection business than the £1.25 billion offered under the Pear bid, and Swiss Re is keen to build up its closed-life business.

Thursday of this week has been set as the deadline for Standard Life and Swiss Re to bid. Pearl Group could have up to 60 days to make a revised bid.

Analysts estimate that a successful takeover could unlock around £1 billion in capital held in Resolution.