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Resolution closes in on Axa deal

Resolution and Axa are looking to tie up the £2.75bn deal for Resolution to buy the majority of Axa UK’s life assurance business over the next seven days.

Sources close to the talks have told the Financial Times that Resolution is near to agreeing a deal with Axa, although there is no certainty of a final agreement between the two companies.

Clive Cowdery, founder of Resolution, needs to secure shareholder approval for a £2bn rights issue in order to fund the reverse takeover.

Under the terms of the proposed deal Axa would receive £2.25bn of cash plus £500m in senior debt as a deferred consideration.

Axa would then buy back €900m (£746m) of shares in its Asian business Axa APH from its UK business, leaving a net cash gain of €1.7bn.

But investors have also told the FT that the Axa purchase is not necessarily a done deal as Resolution’s share price has fallen to 59.5p compared to about 95p when it bought Friends Provident for £1.9bn in August 2009.

One investor told the newspaper: His [Cowdery’s] backers always knew he would try to do a big deal, but the one piece of the jigsaw that is not going as planned is the share price.”

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