Old Mutual lodges Skandia bid
The Local · 2 Sep 2005, 21:48
Published: 02 Sep 2005 21:48 GMT+02:00
Old Mutual said it was offering 43.60 kronor per Skandia share, valuing Skandia at 44.9 billion kronor.
If successful, the operation would create a combined Old Mutual/Skandia group worth 7.9 billion pounds with 192 billion pounds under management, "a powerful combination", Old Mutual said.
In terms of embedded value the Old Mutual/Skandia group would be the eighth-largest insurer in Europe, and in terms of assets under management, it would be number seven, it said.
The two groups have little geographical overlap, with 75% of Old Mutual's current business conducted in Africa, 20% in the United States and 5% in Britain and the rest of the world, while Skandia's core markets are in Scandinavia and Britain.
"The industrial logic of this combination is truly compelling," Old Mutual chief executive Jim Sutcliffe said.
Old Mutual stressed that it was seeking the approval of the Skandia board by September 23, without which it would not go through with the offer.
Skandia said in a statement that its board would study the details of the offer before making a recommendation to shareholders, but company officials were not available for further comment.
Shareholders controlling a total of 15.6% of Skandia's capital had already pledged their holdings to the offer, Old Mutual said.
Old Mutual is a South African-founded company with the majority of its shareholders still in its home market, but its primary listing is on the London Stock Exchange.
Both companies have been talking about a link-up since May, but reports have said that the Skandia board remains divided on the issue.
For every 100 Skandia shares tendered, shareholders will receive 1,650 kronor in cash and 137 Old Mutual shares.
The offer represents a premium of 25% over Skandia's share price in May, when Old Mutual overtures to the Swedish company became first known.
However, it is only marginally above Skandia's latest share price of 42.10 kronor when the stock was suspended earlier on Friday pending Old Mutual's statement.
After resuming trading, Skandia shares were quoted at 41.50 kronor in closing Stockholm trading on Friday, below the bid price, suggesting that investors were not convinced that it would be successful.
Stockholm analysts were not, however, willing to comment on the operation while they studied its details.
Old Mutual, which plans to finance the acquisition with its own cash reserves and loans, saw its shares decline a quarter of a penny to 144.25 pence in London after its announcement.
Old Mutual said it would aim for pretax cost savings worth an annual 70 million pounds as a result of the planned link-up.
The new group would seek a secondary listing on the Stockholm stock exchange, in addition to London, it said.