STANDARD Life appears to be unwilling to raise its offer for Resolution Life and may rely on shareholders seeing that it is superior to a rival bid from Pearl Group.
The Edinburgh company attempted to win back the initiative by detailing how its offer would benefit Resolution shareholders in the hope that chairman Clive Cowdery will once again recommend it.
One source said Standard Life was likely to stick to
its pledge to be "disciplined on price" and was therefore expected to promote the value of its existing offer.
It issued a statement giving further details of the potential synergies in an attempt to cut through a week of mud-slinging with Pearl, which has tabled its own £4.94bn offer for Resolution.
Standard Life has offered 517p per share plus 0.715 of its own shares, valuing each Resolution share at 711.5p at Friday's close, against a 720p cash offer from Pearl, which has also built a 24.2% near-blocking stake in Resolution. Standard Life's board is deciding if it can restructure its offer to reduce acceptances from 75% to 50% as a way round Pearl's shareholding.
Standard Life claims that it can achieve at least £71m in annualised pre-tax cost and financial synergies by the end of 2010, made up of £35m annual cost savings from the integration of Resolution's asset management function into Standard Life's platform; £18m annual cost savings from removing duplication of group head office costs together with rationalisation of the UK Life & Pensions head office and support functions. There would also be financial synergies of £18m a year from the enhanced value of new business.
Standard Life's board was angered by accusations from Pearl that tabling a bid was a sign that its business model was in trouble. Pearl also claimed the cash and shares proposal would dilute its value by 12%, adding that it was "undeliverable".
In the statement issued on Friday, the SL board said it "considers that these savings have been conservatively estimated and are confident that they will be delivered".
Standard Life's head office will continue to be in Edinburgh and it intends to operate certain group functions from London. Resolution's head office in London will be retained as a corporate office of the enlarged group, which will be structured into a number of operational divisions.
The UK financial services business, which includes Standard Life's life and pensions, healthcare and banking divisions, will be extended to include Resolution's new business division and existing business.
