UPDATE 1-Resolution makes bid for Friends Provident-sources

* Proposal likely to be rejected as too low -- sources

* Resolution seen eying up to 4 takeovers in next 18 months

* Proposal is Cowdery's second attempt at Friends merger

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By Victoria Howley and Myles Neligan

LONDON, July 12 (Reuters) - British life insurer Friends Provident Group Plc FP.L has received an all-share merger proposal from buy-out firm Resolution Ltd (RSL.L), two sources familiar with the situation said on Sunday.

The proposal, set out in a letter to Friends Chairman Sir Adrian Montague, does not offer a significant premium to the insurers' shareholders and is likely to be rejected, the sources said.

Resolution, founded by entrepreneur Clive Cowdery, and Friends Provident both declined to comment.

Analysts have been expecting Resolution to pursue its first deal since the Financial Services Authority, Britain's financial regulator, closed an investigation into the vehicle in May.

Resolution raised 600 million pounds ($972.1 million) from investors in a stock market listing last December and is expected to return to shareholders if extra cash is needed for acquisitions.

Resolution plans to approach other insurance companies if it cannot agree a deal with Friends Provident, one of the people said, adding the vehicle has had discussions with a number of parties and wants to make three or four acquisitions in the next 18 months.

News of Resolution's approach was reported first in the Sunday Times and Sunday Telegraph newspapers. Friends Provident is likely to turn down the offer on the grounds of price, The Telegraph said.

Resolution would keep Friends Provident's top management team in place, the Sunday Times said. The insurer is headed by Chief Executive Trevor Matthews, who joined from rival Standard Life Plc (SL.L) in July last year.

This is the second time that Cowdery has led an attempt to merge with Friends Provident. His previous venture, also called Resolution, agreed a tie-up with Friends in July 2007, but later broke off the deal and sold itself to Pearl Group, a privately-held life insurer led by entrepreneur Hugh Osmond. (Additional reporting by Rhys Jones; Editing by David Holmes)