Shareholders in Friends Provident and Resolution need no injunction to remember, remember the fifth of November: that date was set yesterday as the day on which both sets of investors will vote on the proposed £8.4 billion merger to create “Friends Financial”.

Of more immediate interest to followers of Resolution is the expectation that Pearl, the closed life fund specialist that holds 16 per cent of Resolution, will table a bid of its own long before those four weeks are up. However, the shares fell nearly 2 per cent yesterday to 682p amid suggestions that Pearl - whose stakebuilding has helped Resolution to outperform its peers by 15 per cent since the deal was announced in July - will not pay any more than 660p a share. That level would offer only a 6 per cent premium to the 623p-a-share value used as a starting point for the purposes of the Friends Financial merger.

Yet it would also ignore the potential of the Friends deal to create substantial additional shareholder value - according to how those benefits are priced, it is possible to reach a price nearer 800p a share.

The most substantial benefit remains the opportunity to use Resolution’s balance sheet and cashflow to finance Friends Provident’s new business growth at no additional cost. Smaller, but still significant, is the value of Resolution’s asset management business and £100 million of estimated pretax cost savings.

Such factors explain why a bid of 660p is likely to have little chance of success. But there is also the question of funding: that price values Resolution’s equity at £4.5 billion.

The sale of the asset management operations and other measures could release about £2 billion, but that still leaves £2.5 billion to find, which could prove a tall order in what remain constrained capital markets. It is that gap that has prompted suggestions of a joint bid in conjunction with a rival life insurer, such as Standard Life.

Pearl wants nothing of Friends Provident, of course, but right or wrong Pearl will have to counter the belief among shareholders that any bidder for Resolution must pay well above 700p to be victorious.

If Hugh Osmond, Pearl’s chief, and his advisers can find any more fuel to their argument that the combination looks shaky, they are likely to move swiftly: an all-cash counterbid could be on the table before the week is out. But as things stand, not least because of the less substantial savings from putting Pearl and Resolution together, there appears more of a chance of the bid going through in its current form.

Hold on.

Vodafone Group

Two summers ago, Vodafone sought to calm restive investors with a promise to rein in acquisitions. Yet the weekend’s well-flagged £537 million purchase of Tele2’s broadband assets in Italy and Spain is only the latest in a clutch of deals secured since then, including the $19 billion mega tie-up with Hutchison Essar in India.

Investors are not complaining. What they were really seeking from Arun Sarin, chief executive, that turbulent summer was evidence that Vodafone had a clear strategy for coping with slowing mobile growth and severe price competition in its core Western markets.

With this latest acquisition - the company’s first nonmobile transaction - Mr Sarin has provided further evidence that he does. The group’s rigid mobile-only policy was fast becoming redundant: offering fixed broadband alongside mobile should help Vodafone not only to lock in existing customers but also to raise significantly their average spend, or “arpu” through cross-selling. In Italy and Spain, the broadband market is relatively underpenetrated, at 44 per cent and 57 per cent of households respectively. It is also growing extremely fast, with sales in Tele2’s Italian business up 200 per cent in the first half of this year. Moving into fixed line also keeps the door open to Vodafone offering “converged” services that meld fixed and mobile technology.

But in his desire to compete more effectively with Telefónica and Telecom Italia, has Mr Sarin overpaid? A price that equates to £435 per broadband customer looks high, but is in line with recent deals elsewhere. And while both businesses are currently loss-making, Vodafone has the scale that Tele2 lacked, and should be able to achieve significant synergies. All the same, the short-term impact on earnings is likely to be negligible. At 168p, Vodafone, up 19 per cent this year, trades at 13.8 times next year’s earnings and yields 4.1 per cent. With the company’s strategic deficiencies in Europe being tackled, and its emerging markets burgeoning, Vodafone should be held.

International Greeting

Since August’s profit warning, the AIM-listed giftwrap and stationery maker appears to have stepped up its efforts to fulfil the first part of its name; yesterday’s purchase of a 50 per cent stake in Artwrap, an Australian rival, marks its third overseas deal in six weeks.

That pace is understandable given tough conditions at home – specifically, pressure on margins from its UK own-label customers – that triggered the summer’s alert. Through bolt-on deals and organic growth, International Greetings plans to reduce the proportion of sales from the UK to below 50 per cent, from the current 65 per cent.

Such forays bring increased execution risk, but, at the prices agreed, swiftly enhance earnings. At yesterday’s 263½p, the shares sit 36 per cent below their prewarning level, which seems harsh given that forecasts were cut by just 13 per cent. IG remains tightly held, but, at 9.6 times next year’s earnings, and offering a 4 per cent dividend yield, looks reasonable value. Buy.

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