Pearl ups bid in battle for Resolution

By Clara Ferreira-Marques

LONDON (Reuters) - Insurer Pearl made a 4.9 billion pound ($10.1 billion) cash offer for rival Resolution RSL.L on Friday in a dramatic move aimed at thwarting a deal between Resolution and Standard Life (SL.L: Quote, Profile, Research, Stock Buzz) agreed just hours earlier.

Run by entrepreneur Hugh Osmond, a long-time rival of Resolution Chairman Clive Cowdery, Pearl also boosted its position by increasing its stake in Resolution to 24.2 percent.

Pearl, which has had two previous approaches rejected by the Resolution board and is backed by mutual insurer Royal London, said on Friday it was now offering 720 pence a share in cash, up 4.2 percent from its last proposal.

This compares with a cash-and-shares bid from Standard Life that was worth 715 pence a share at Thursday's closing prices, and which was endorsed by Resolution's board earlier on Friday.

Resolution shares, however, climbed as much as 3 percent to 730 pence on speculation the battle had further to run.

"We haven't seen the end of this," said Pali International analyst Marcus Barnard. "Standard Life has got to improve the offer. I'm surprised they low-balled it in the first place."

Oriel Securities analyst Roman Cizdyn said it was tough to see which way the battle would go, but Pearl's stake and the fact its bid was all cash could give it the upper hand.

"We're right in the middle of it. I always thought that Osmond could go higher -- higher still than now. And Standard Life probably can go higher as well," he said.