STANDARD LIFE and Swiss Re are this week poised to make an audacious £5 billion takeover bid for rival Resolution.

The joint bidders are working on an offer of between 730p and 740p a share in an attempt to strike a knockout blow in the increasingly fierce battle to win Resolution.

The offer is understood to be around 70% in cash as well as new Standard shares. The deal could also unlock about £1 billion in capital held in Resolution.

Standard is interested in Resolution’s protection insurance business, which includes a distribution and sales deal with mortgage bank Abbey, and the group’s fund-management operation with £60 billion of funds.

Swiss Re would take over Resolution’s life-assurance funds, which no longer write new business.

However, Standard faces stiff competition from entrepreneur Hugh Osmond’s Pearl Group, which already holds a 16.5% stake in Resolution and is backed by Royal London.

On Friday, Pearl made a 691p per share, or £4.7 billion, bid for Resolution just weeks after it had made an approach at 660p per share.

Resolution, whose shares closed at 722p, immediately rejected Pearl’s new offer as undervaluing the business and vowed to press ahead with its £8.6 billion merger with Friends Provident.

Bankers believe Standard can afford to pay more for the protection business than the £1.25 billion that Royal London is offering under its agreement with Pearl. Swiss Re is also determined to build up its closed-life business after a series of aggressive deals.

The Takeover Panel has set a deadline of 5pm on Thursday for Standard and Swiss Re to bid.

Osmond is understood to be prepared to sweeten his offer and would have up to 60 days to make a revised bid.

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