Standard Life and Swiss Re are poised to enter the £5 billion battle for control of Resolution, Clive Cowdery’s closed life fund consolidator, by tabling a joint takeover bid.

Sources said yesterday that the two companies were in advanced talks and hopeful of finalising the financial details of an offer.

The news emerged amid increasing speculation that Friends Provident, Resolution’s proposed merger partner, was already sounding out investors about a £600 million fundraising. The funding would be needed if the merger with Resolution fell through. Friends denied the rumours and said that it remained “committed” to the Resolution deal.

Standard Life, Britain’s fifth-largest insurer, is understood to have approached Swiss Re, the reinsurer, to discuss a combined bid for Resolution last week. Insiders said that Standard Life had given itself until this Friday to find a bid partner for a cash and shares offer.

The proposal is expected to be priced at about 700p a share, trumping the 660p offer tabled last week by Pearl, the closed life fund run by Hugh Osmond, the former pizza entrepreneur.

“Standard Life will want to move sooner rather than later,” one source said. “You’re not serving your institutional investors very well if you wait too long. If you look at the progress of the Friends timetable, information is very valuable at this stage and investors will want to have a complete picture.”

Resolution and Friends have scheduled a shareholder vote on their merger for November 5, with the Takeover Panel expected to insist that all interested parties declare their hand by October 26. In theory, this means that Standard Life and others have a fortnight to make up their minds.

Resolution shares closed last week almost 2.5 per cent higher at 708½p on renewed speculation that Standard Life was close to tabling an offer. Standard Life’s shares fell 7¼ per cent to 289¼p, with its investors rattled that it might overpay.

Analysts believe that a rival bidder may eventually have to offer up to 750p per share for Resolution.

Standard Life is keen on Resolution’s asset management unit and Scottish Provident, the group’s protection and health insurance business, while Swiss Re would take on Resolution’s closed funds.

The field of possible bid partners for Standard Life was limited. Deutsche Bank has made strides in the closed life arena, buying Abbey Life from Lloyds TSB for almost £1 billion this year, but it is an adviser to Pearl and would face a conflict of interest.

It is understood that Standard Life held talks in recent weeks with Pearl over a move for Resolution, but no agreement materialised. Instead, Pearl joined forces with Royal London, the mutual insurer, for its 660p-per-share cash assault on Resolution, which was summarily rejected by the insurer’s board.

Despite the rejection, talks are expected to continue and a higher offer from Pearl is believed to be likely. Dresdner Bank, Lloyds TSB and HBOS are understood to be providing the funding for Pearl’s offer.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax