Britain’s Pearl Insurance Moves to Block Resolution-Friends Merger

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Pearl Insurance indicated last Friday it was preparing to spoil rival British insurance company Resolution PLC’s acquisition of Friends Provident PLC.

Pearl announced that it has increased its stake in Resolution to 12.74 percent, suggesting it is moving toward a blocking stake of 15 percent.

Privately held Pearl said the deal proposal put forward by Friends Provident and Resolution this week would deny investors in Resolution much of the growth it could enjoy if it remained independent.

“Given its own experience, Pearl believes that there is potential for more value to be created for Resolution shareholders through pursuing strategies similar to those that Pearl has applied to its own business,” Pearl said.

Resolution and Friends Provident have announced that they are in advanced discussions about an all-stock deal that would create one of Britain’s largest life insurers.

The new company, Friends Financial Group PLC, would be valued at $17.7 billion, with 9.5 million customers and managed assets of $340 billion.

Resolution shareholders would own 50.9 percent of the company, with Friends Provident’s owners holding the rest.

The companies said they expect to complete the deal in the fourth quarter. Some analysts had speculated that other possible bidders could attempt to disrupt the tie-up by making higher bids.

Resolution shares gained 2.9 percent while Friends Provident stock dipped 0.8 percent.