Standard Life has scrapped its £4.9bn battle for Resolution - a move widely anticipated after a drop in its shares slashed the value of its bid.

Standard Life has scrapped its £4.9bn battle for Resolution - a move widely anticipated after a drop in its shares slashed the value of its bid.

Standard's move marks its withdrawal from the biggest insurance takeover battle since 2000, when CGU bought Norwich Union for £7.4bn to create Aviva, the UK's largest insurer.

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

"The board of Standard Life has decided not to increase or restructure its offer in any way," the group announced yesterday.

Standard's cash-and-shares bid was initially backed by Resolution's board when it was tabled last month, but that offer was trumped less than an hour later by Pearl, which moved in with an all-cash offer and raised its holding in Resolution to more than 24%.

At Friday's close of business, Standard's offer was worth just 691p per Resolution share - compared with Resolution's closing price of 723p and Pearl's 720p-a-share cash offer.

Standard was thought to have been preparing a revised bid to compete with the 720p-a-share offer on the table from Pearl, and yesterday it said it continued to see "strong commercial logic" in a deal and "significant financial and operational synergies".

However, a source close to the Standard's board yesterday told The Herald: "In the end, it all came down the value of the shares.

"For Standard Life to have shifted itself into a winning position it would have required a major restructuring of the deal which may have gone against shareholder value."

Nonetheless, Sandy Crombie, the insurer's chief executive, yesterday said he was confident of continued share- holder support, and added that the group would consider further acqusition opportunities.

"Acquisitions were never a key part of our strategy,"

Crombie said, but he added that he would not rule them out either.

Asked about the general feeling at Standard Life yesterday, the source said: "We're naturally disappointed. We will continue to focus on organic opportunities, and if other potential acquisitions come up that we are obligated to look at, we will do so."

However, analysts had said an aggressive move by Standard Life could anger its investors and raise questions about its standalone strategy.

The insurer now faces the task of convincing investors it can return to its original plan to grow organically.

Meanwhile, Resolution, which is now left with the all-cash bid from top shareholder Pearl, is expected to make a statement today.