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SKANDIA

Old Mutual offer values Skandia at 43 billion kronor

Insurer Old Mutual PLC said it held discussions with Sweden's Skandia Insurance Co and its shareholders last week over a 42 kronor per share offer for the company, valuing the Swedish insurer at about 43 billion kronor.

Under the proposed offer, the price would be paid 40% in cash, and 60% in Old Mutual shares. In a statement, Old Mutual said it was now mulling “selected modifications” to the proposal in order to address concerns raised by the Skandia board.

The company said it remained keen to get the backing of the Skandia board, but added that it believed a majority of Skandia’s shareholders would welcome a firm offer at that price.

Skandia today said discussions with Old Mutual are continuing, although it has yet to receive a formal bid.

“Discussions with Old Mutual are continuing. If and when a formal offer is presented, the board will evaluate this offer. A further announcement will be made when necessary,” said Skandia.

Old Mutual shares closed at 136 pence in London on Friday, the last day’s trading before the UK bank holiday weekend. Skandia shares closed at 41.30 kronor on Monday.

According to a report in the Financial Times, some members of the Skandia board are holding out for a higher price, while others want to keep the company independent.

The Guardian reported that Skandia wants Old Mutual to raise the cash element of its offer, and also wants some Skandia board members installed on the Old Mutual board.

Old Mutual, which is listed in London but generates nearly half of its earnings in its historical home of South Africa, announced in May that it was in talks to acquire Skandia as part of a long-standing strategy of building a diversified international business.

AFP

TAKEOVER

Scania review board dissects Volkswagen bid

The independent committee looking at Volkswagen's take-over bid of Swedish truck giant Scania began its work on Tuesday, stating promises that headquarters would remain in Sweden were paramount.

Scania review board dissects Volkswagen bid
IF Metall Union representative Johan Järvklo sits on the independent review board. File: TT

Åsa Thunman was appointed chairwoman of the committee, which has invited financial consultants from Deutsche Bank and Morgan Stanley as well as legal advisors from Swedish law firm Mannheimer Swartling to assist them in their appraisal.

Thunman said in a statement that the committee would look at whether the $9.2 billion bid was in the best interest of Scania shareholders.

The effect on Swedish industry would also be considered, underlined committee board member Peter Wallenberg Jr.

"It has noted that Volkswagen does not foresee any significant changes with regards to Scania and that Scania’s headquarters and its development centres will remain where they are today," Wallenberg Jr. said. "These matters are of course of importance to the company and for Sweden.”

At the plant in Södertälje, employees have been busy discussing the bid. Assembly line worker Ahmed told The Local that his colleagues did not fear that production would be relocated to Germany.

"They couldn't possibly move all these machines and equipment," Ahmed, which is not his real name, told The Local on Tuesday. "But everyone on the floor has been discussing the offer."

Volkswagen tabled their $9.2 billion bid to swallow up Scania last Friday. It already owns 89 percent of Scania's voting rights and 62.6 percent of the company, with VW eager to secure the nearly 40 percent they do not own. The takeover has encountered resistance from two of Scania's minority owners, however. Both insurance outfit Skandia and pension fund AP4 have expressed reservations about selling up to Volkswagen.

“Scania’s prerequisites to maintain its leading position are better as a listed company than as a subsidiary in a larger group. Skandia doesn't intend to accept the offer," Caroline af Ugglas, head of equities at Skandia, told Bloomberg over the weekend.

Scania, which was founded in 1891 and has operations in more than 100 countries, boasts 38,600 employees. Around 16,000 work with sales and servicescross the company's subsidiaries, and over 12,000 work in production units. The company has headquarters in the Swedish town of Södertälje, where almost 6,000 employees work. The headquarters also hosts the research and development operations, with 3,300 employees.

"Changing owners won't make any difference to us in the near future," assembly line worker Ahmed said. "But we do wonder if the rules will change later on." 

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