Resolution and Friends Provident are in "advanced discussions" over a possible £8.3bn merger.
In a joint statement, the firms say “a merger would create significant value for both sets of shareholders by combining Friends Provident's new business growth opportunities with Resolution’s strong cash flow generation”.
If agreed, the merger would involve an all-share combination of the two; with Resolution shareholders owning 50.9% and Friends Provident shareholders 49.1%.
The merger would extend to products, customers, distribution, financial profile and management.
“The potential synergies arising from a possible merger will reflect the already highly efficient nature of Friends Provident's back office processing and Resolution's recent outsourcing agreement with Capita, which will commence on 1 August 2007,” the statement says.
Friends Provident is surging in early trading, currently up 14.1 points, or 7.56%, to 200.5.
Resolution is also ahead, up 13 points, or 2.07%, to 642.
The two groups say they will make a further announcement when appropriate.
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"Friends Provident's Quaker origins and rules of practice have historically thwarted other take-overs and mergers. What's new here?"
Michael Forbes Bates
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