If Clive loses Friends he could find new zombies

It's only three years since Cowdery worked out that there was a future in zombie funds, those bundles of life assurance policies run by companies which have closed to new business. He grasped that the way to make money was to do better for the policyholders, and the way to do that was to put enough funds together to get scale and attract good investment managers.

He wasn't the only one, but Resolution is now the biggest, valued at nearly £5 billion. There are not many zombie funds left that are big enough to make an impact, so in July it announced merger terms with Friends Provident. Unlike Resolution, which generates capital from maturing policies, Friends needs more money to finance its growth. It sounds like a large, logical and rather dull deal.

Yet, as the charts here show, it's not quite working out that way. The market was distinctly underwhelmed and Friends shares, far from jumping, have fallen on fears of a rights issue if the merger doesn't go through. Resolution shares rose, but only because two potential bidders emerged for the company.

Both have problems. Pearl, a zombie specialist run by serial entrepreneur Hugh Osmond, has already bought 16% and would like to pay 660p a share for the rest - hardly a knockout bid with the Resolution price at over 700p.

Standard Life would need to lean heavily on Swiss Re to pay the bill, and it's barely two years since Standard was on the brink of becoming a zombie itself. It has a gap in its credibility as well as in its finances.

Cowdery has dismissed 660p, Standard has yet to show its hand, and both must put up or shut up by next Thursday. If neither puts up, the merger will go through on Guy Fawkes Day and buyers of Friends shares at today's 172p will do nicely. It doesn't look likely. If either bidder can stretch past 700p, Cowdery would be spared the difficulty of finding talent to run the merged business - no easy task since he pushed out the well-regarded Paul Thompson shortly after the merger with Britannic that brought Resolution to the stock market.

He might think his task was done, and that there are more interesting prospects elsewhere. If he cashed in, he could look north, to the home of zombie mortgages in Newcastle. The borrowers from Northern Rock might wonder whether the statement from Virgin Money's chief executive that she would plan to "grow mortgage margin" means "at their expense".

The Virgin King, Sir Richard Branson, would love to get hold of £13 billion of Government-guaranteed money, but it's a preposterous idea, and typical of Beardie's technique of negotiation by press release. The zombies deserve better and so do the rest of us.