Standard Life trails in Resolution race

Published on Sunday 28 October 2007 01:19

STANDARD Life is coming under pressure to lift its offer for Resolution Life or lose out to a higher bid from Pearl Group.

Analysts believe Hugh Osmond, the Pearl Group boss, is in pole position after lifting his bid to 720p a share in cash, against a cash and shares offer from Standard Life worth 716p at Friday's closing prices. The bid from Pearl, valuing Resolution at 4.94bn, is favoured by those who prefer cash to paper in the current market, but the value of the Standard Life bid may have greater growth potential, offering greater value to shareholders.

Significantly, Resolution did not reject Pearl's latest offer outright as it did with previous approaches and Resolution chairman Clive Cowdery spoke to Osmond by phone on Friday night.

The battle is described as too close to call by analysts, but Osmond also raised Pearl's holding in Resolution to 24.2%, close to making it a blocking stake. However, Standard Life chairman Gerry Grimstone said his board had a number of options available, suggesting it may raise its offer.

One analyst said Pearl's revised bid was "incredibly stretched", though Barry Cornes at Panmure Gordon said in a newly published note that Pearl had the upper hand. "Although we believe that both sides can and probably will increase their offers over the next 60 days, we believe that Pearl will be ultimately victorious," he said.