Equitable's seven-month search for a buyer looked to set to end on Monday in a deal that will create a bank and life insurance giant Halifax Equitable.

However, even as Halifax scented victory, US financial services company GE Capital was considering late on Monday night whether to challenge the sale with a new counter-bid.

GE Capital has not yet raised the price on offer, but it is looking to rejig the structure of its bid for Equitable, according to Reuters news agency.

It would also consider "substantially" improving the price in a last-ditch bid to win Equitable over, reports the news agency.

The Halifax deal

Halifax's proposal will help the rump of Equitable bridge a �1.5bn funding gap, which emerged last year after the firm was forced in a landmark House of Lords ruling to honour payout commitments to some policyholders.

But small print in the contract warns that the full �1bn will be paid out only if holders of disputed policies back the deal, and the Halifax Equitable meets profit targets in 2003 and 2004.

Reducing risk

Halifax is seen by some to be taking a brave step in buying the Equitable - a move that other potential bidders such as the Prudential shunned.

But the conditions of the deal go a long way to reducing the risk associated with buying the society.

Just �500m will be paid upfront by Halifax to secure the sales force and the administrative part of the business.

Equitable Life is reported to have a highly efficient administration and respected sales force, making the deal attractive for the Halifax.

The remaining �500m is subject to reaching a compromise with policyholders and meeting future sales and profits targets.

First reactions

Chris Headdon, Equitable's chief executive, said there was a "strong incentive" for holders of the disputed policies, the so-called guaranteed annuity rate plans, to support the takeover.

"This is a good result for policyholders after a long period of uncertainty," he said.