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Pearl looks for its own Resolution

The formation of Friends Financial is still in huge doubt with Pearl Assurance owner Hugh Osmond believed to be calling on Deutsche Bank and Morgan Stanley as potential financiers in a takeover of Resolution Life plc.

Osmond put a massive spoke in the merger works towards the end of last week by acquiring a 16 per cent stake in Resolution Life, after it looked set to join Friends Provident in forming the fifth largest listed UK life assurer.

Pearl’s attempts to destabilise merger talks become obvious on Thursday last week, when after acquiring an 11.2 per cent stake in the firm, the group announced to the stock exchange that the merger does not represent good value, with the firm looking forward to speaking to the board over possible alternatives for the firm.

Osmond’s firm is not alone in its concerns over a potential deal. Morley holds a 5.7 per cent stake in the firm and has indicated that it is willing to talk to him about alternate plans, while a huge proportion of Friends Provident shareholders are believed to be unhappy with the merger.

As for the investment arms, F&C has bullishly come out and claimed that it is heading the merger of the two asset management businesses, while also claiming that it is looking to maintain the boutique policy put in place by Resolution director Jonathan Polin.

With three of the boutiques having already achieved critical mass, the only question that remained was over the newest addition, a 50-50 multi-manager joint venture with former Fidelity managers Chris Ralph, Simon Mungall and Jason Collins. However, Resolution has come out and stated that it is has a commitment to the offering, despite a possible overlap with F&C’s own range managed by Richard Philbin.

F&C has also stated the merger will lead to some £26m of cost synergies and will ultimately result in some redundancies.

BestInvest head of communications Justin Modray says: “I can’t see us changing anything in the short term until we start to see a rationalising of the range. Anyway the stuff that is rated like the Resolution boutiques or Ted Scott’s stewardship range is likely to be untouched in any case as the managers are so good.”


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