U.K. insurer Standard Life is considering a cash-and-shares bid for Resolution, it said on Wednesday, once again throwing into doubt Resolution's agreed nil-premium merger with rival Friends Provident.
In a surprise move after weeks of speculation on the Resolution-Friends deal -- already being challenged by rival Pearl -- former mutual Standard Life said its bid could entail asset disposals, but gave no details.
A spokesman declined to comment on an offer price or on whether Standard Life was working with rivals on a joint offer.
Resolution shares rose 5.6% to 691.5 pence, valuing the group at over 4.7 billion pounds ($9.5 billion). Standard Life shares were up 1.2% at 278 pence, off an earlier high of 298.25p.
"I'm surprised they are thinking about doing this," said Marcus Barnard, analyst at Pali International, saying Resolution would be a big business for Standard Life to swallow.
Resolution's planned merger with Friends to create Britain's fifth-largest insurer, announced in July, is already being threatened by unlisted competitor Pearl, which like Resolution has concentrated on consolidating closed life funds.
Pearl, which has built up a key 16.5% interest and says the proposed Friends deal does not maximize value, has indicated it is considering all options including a bid for Resolution.
Resolution has consistently said it will consider alternatives to the Friends deal, and a spokesman reiterated on Wednesday it would look at bids that offer "greater value and equal certainty" to the Friends deal.
Pearl, run by pubs-to-pizza entrepreneur Hugh Osmond, was expected to make a move later this month, but it appears to have been caught off guard by Standard Life's move.
From Prey to Predator?
Standard Life, a former mutual which listed in July 2006, was linked with Resolution just over a year ago, when sources close to the situation named Resolution as one of the undisclosed "number of parties" which the Scottish insurer said approached it before it demutualized and listed.
The insurer has since said its plans are focused on organic growth, but the sources said there could be industrial logic in a deal coupling its growth with Resolution's cash-generating business.
Sources close to the situation told Reuters last month that Pearl and Standard Life held talks over a potential joint bid for Resolution, but the talks ended without success.
"Resolution and Standard Life potentially makes lots of sense, depending on what the terms were. It's been talked about a lot and we know they've talked before...the devil will be in the detail," said Kevin Ryan, an analyst at ING.
Resolution and Friends tried to thwart a move by Pearl by restructuring their deal so Resolution needs the approval of just a majority -- and not 75% -- of shareholders for that deal to go through.