Standard Life has admitted defeat

The withdrawal leaves the way open for rival suitor Pearl Assurance, which already owns a quarter of Resolution.

Resolution's board had initially backed Standard Life's bid, but changed its mind after Pearl came in with a higher offer of �4.9bn.

Standard Life, which first approached Resolution at the end of last month, said in a statement that it did not see its takeover being successful.

The Edinburgh-based firm added that it did not wish to increase its offer for Resolution, as such a move would not create sufficient value for Standard Life shareholders.

Yet despite the withdrawal of its bid, Standard Life said it continued to believe that its planned acquisition of Resolution "would have delivered significant financial and operational synergies".

All-cash offer

Pearl's bid had a number of advantages over Standard Life's in addition to the fact it was higher.

While Standard Life was only offering a mixture of cash and shares, Pearl's offer was all-cash.

In addition, Pearl was already a Resolution shareholder, and once Standard Life launched its bid, Pearl increased its shareholding in Resolution to one quarter.

This gave it the power to effectively veto Standard Life's approach.

Resolution is expected to make an announcement on Monday morning.