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‘Standard and Friends now prime targets’

Analysts expect bidders to emerge for Standard Life and Friends Provident after Pearl seemed to have won the war for Resolution.

Standard’s unsuccessful attempt for Resolution and its move away from its organic growth strategy also raise serious questions about its senior management, says Blue Planet Investment Management assistant investment manager Harish Haridas.

Collins Stewart analyst Tim Young says Standard has always been vulnerable to a bid and will be even more so after the slump in its share price. He says group chief executive Sandy Crombie has proven himself by turning round the business but Standard needs to acquire to improve market share, diversify and increase profitability. He says Resolution was a golden opportunity.

Pearl had claimed Standard’s bid for Resolution was defensive and said its business was highly concentrated on pensions, had low new business margins compared with its UK peers and a high lapse rate, with pension surrenders equivalent to 61 per cent of its new business inflows in 2006.

Young believes a deal for Friends could be imminent after its agreed merger with Resolution fell through last month, pointing to Old Mutual, Zurich and Axa as potential bidders. He says Friends group chief executive Philip Moore has board backing but investors are angry at his handling of the failed merger.

Young says: “You can expect to see a deal very soon. Its stock is very low, there is plenty of value to be had and plenty of suitors around.”

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