UPDATE: Resolution Shares Dip On Report Pearl Preparing Bid

<h2>UPDATE: Resolution Shares Dip On Report Pearl Preparing Bid </h2> (This updates an item that ran at 0721 GMT with additional detail, comment and new share price.) By Marietta Cauchi Of DOW JONES NEWSWIRES Resolution PLC (RSL.LN) shares slipped Thursday following a report that rival closed life-fund operator Pearl Assurance may soon launch an all-cash bid for the company but at a discount to its current share price. The Financial Times said Pearl could make an offer of around 660 pence a share, representing a 5.6% discount to Resolution's closing price Wednesday and valuing the company at GBP4.5 billion. At 0800 GMT, Resolution shares were down 1.7% or 12 pence at 683 pence in a broadly higher market. Resolution has already agreed to merge with Friends Provident PLC (FP.LN), with the aim of creating a GBP8 billion life assurance company. A low competing offer could scotch market speculation of a bidding war for the business.<br /><br />The prospect of rival bids from Pearl and Standard Life PLC (SL.LN) has recently driven up Resolution's share price. Pearl will make a competing bid but can't do so at less than 660 pence a share as this was highest price it paid for Resolution shares while building its stake, said a market source. Resolution is the largest specialist manager of U.K.<br /><br />in-force life funds and Pearl is in the same line of business.<br /><br />Pearl has been building a stake in the company in recent months.<br /><br />It has previously criticized Resolution's proposed deal with Friends Provident, saying it won't maximize value for Resolution shareholders. Late Wednesday Pearl announced that it was consolidating its position in Resolution shares, which now amounts to 16.5% including options.<br /><br />It said it was pulling back some shares it had earlier transferred to a third party as part of a financing agreement. Analysts were skeptical about the FT report, and said that a bid at 660 pence was unrealistic because it was lower than Resolution's half-year embedded value.<br /><br />They said it didn't take account of the likelihood that Pearl would sell on some of Resolution's assets.<br /><br />"We do not think that a bid can possibly come below 750 pence and should be nearer 800 pence.<br /><br />We are very clear that management would not recommend such a low offer.<br /><br />We also believe that shareholders would immediately dismiss an offer at this level," said MF Global Securities Ltd. The timing of any bid from Pearl has always hinged on Resolution shareholders being in receipt of the Friends Provident merger documents.<br /><br />"The shareholders need to be able to compare the two bids so Pearl will come in with its offer once they have had had a chance to read the Friends Provident merger papers and can make a comparison," the market source said. Standard Life has also said it was considering making a cash-and-share offer for Resolution.<br /><br />The proposed merger of Friends Provident and Resolution would be an all-share deal.<br /><br />"Any offer would only be made if the Standard Life board considered it to be in the best interests of Standard Life shareholders," the company said recently. It said an offer might include disposals, prompting speculation that it could team up with another company and divide Resolution's business. Pearl has reportedly also had discussions with a variety of parties about dividing up the company. Resolution and Friends Provident recently changed the terms of their merger to require a lower level of approval from Resolution shareholders in place of a higher percentage of Friends Provident shareholders. Resolution said then that it was progressing with the merger and that it remained relentlessly focused on shareholder value. -By Marietta Cauchi, Dow Jones Newswires; 44 207 842 9241; marietta.cauchi@dowjones.com (END) Dow Jones Newswires