Old Mutual outlines hostile Skandia bid

British-listed insurer Old Mutual on Wednesday published detailed plans of its hostile takeover bid for Swedish peer Skandia, aimed at creating Europe's eighth largest insurer.

The hostile bid valued the Swedish group at 43.5 billion kronor, Old Mutual said in a prospectus outlining details of the bid.

“Today’s document outlines significant benefits for Skandia’s shareholders from creating Europe’s eighth largest life insurer,” said Old Mutual, a South African-based company listed on the London Stock Exchange.

The takeover would create “an insurance powerhouse in four major markets – Sweden, South Africa, the UK and USA,” with some 2,600 billion kronor of funds under management.

That would make it one of the largest fund managers in Europe, Old Mutual said.

Skandia would become the group’s “senior product brand” across Europe, preserving the Swedish insurance company’s heritage.

Expected cost savings from merging the two businesses would total almost 1.0 billion kronor.

Meanwhile, Old Mutual confirmed it would maintain the independence of Skandia Liv – a mutually-run life and pension insurance subsidiary of Skandia – should the takeover succeed.

Skandia’s shareholders would retain 26 percent of the combined group’s capital and would have two representatives on the board of directors.

Although the European headquarters of the group would be in the Swedish capital Stockholm, the board of directors would be based in London, the statement added.

Old Mutual lodged a cash-and-share takeover bid at the start of September, offering 43.60 kronor per Skandia share.

“The offer price represents a 21-percent premium to the Skandia share price before confirmation of talks between the two companies,” Old Mutual said Wednesday.

“The offer is a significant increase over the average share price over the last 12 months.”

Last month Skandia said it was recommending that shareholders reject the offer which thereby became hostile.

The chairman of Swedish insurer Skandia, Bernt Magnusson, said last week that he would step down after his board rejected the bid which he had supported.

Old Mutual has also faced stiff resistance from major investors.

Shareholders controlling nearly 10 percent of Skandia’s capital have rejected the takeover offer, according to figures presented in the Swedish press last week.

Swedish pension scheme AP2 meanwhile confirmed Wednesday that it was looking at withdrawing significant investments in Cevian Capital should the Nordic hedge fund refuse to pull support for the bid.

Old Mutual has repeatedly said it is aiming for 90-percent acceptance, though it has indicated that it would be willing to pursue its takeover offer even if it does not reach that level.



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."