Insurer Resolution has withdrawn its backing for Standard Life's £4.92 billion takeover offer. The decision comes after Standard's rival, Pearl, moved in with a higher £4.94 billion indicative offer.

Pearl has built up a 24% stake in Resolution, the UK's largest manager of closed life 'zombie' funds. This effectively blocks Standard's offer, which needs support from 75% of Resolution's shareholders.

Resolution said it had withdrawn support for Standard Life's offer 'in its current form', but added that it 'continued to see real strategic benefit in the combination of Resolution and Standard Life'. The insurer said it would further talks with both companies before making a recommendation to shareholders.

Resolution urged shareholders to take no action until a further announcement from the company.

Standard Life, which said it was looking at options including taking control of Resolution via a simple majority, has agreed a deal with insurance group Swiss Re to sell off the lion's share of Resolution's closed life funds for £2.3 billion.

But under takeover rules, it will need shareholder approval of at least 75% of Resolution's shareholders to access the cashflows from such a deal and gain tax-efficiency benefits.

Standard Life, which would become one of the UK's leading life and pensions firms if its offer succeeded, said it 'continued to believe strongly' in the logic behind the tie-up with Resolution.

Resolution added that the potential value of a restructured Standard Life/Swiss Re offer - currently 716p in cash and shares - 'could be attractive' to its shareholders. Privately-owned Pearl, led by financier Hugh Osmond, plans to sell off assets of Resolution to mutual Royal London if he wins control. Shares in Resolution remained unmoved at 727.5p.