However, KBW says Friends Provident’s board appears to have dropped its objections to the offshore tax structure and the incentives on offer to Resolution management.
It is thought the Government’s ongoing criticisms of tax havens could make it reluctant to sell parts of Lloyds, which is 70 per cent owned by the taxpayer, into the Resolution structure and the incentives for Resolution management might also create public relations difficulties for the Government.
In a research note on the Resolution/Friends Provident deal, KBW says that as pressure was effectively exerted on the Friends board by joint shareholders of the two firms, this may not be as easy in future bids for other firms.
It says Standard Life and Legal & General are likely to be “reluctant brides”, while Aviva and Prudential value their UK arms as “cash cows”.
KBW says the “deal economics” of the Resolution/Friends deal have not improved materially from the previous offer.
It says: “Contrary to our expectation the proposal for Resolution to buy Friends Provident now appears likely to go through at largely unchanged terms versus when the Friends board rejected it before.
“The board appears to have come under pressure from the circa 30 per cent of shareholders who have stakes in both groups.
“Importantly the Friends board has dropped its objections to the offshore tax structure and the ’10 per cent of upside risk free rate’ incentive that Resolution management gets.”