Skandia profits strengthen independence claims

Swedish insurer Skandia, the target of a hostile takeover bid by Old Mutual, said on Tuesday that strong third-quarter earnings strengthened its resolve to remain independent.

Skandia’s net profit increased by 10.5% to 346 million Swedish kronor (42.3 million dollars, 36.1 million euros) and pre-tax profit nearly doubled to 398 million kronor.

Operating profit, calculated according to the so-called embedded value method, came in at 2.27 billion kronor, more than three times what it had been a year earlier.

This was well ahead of market expectations of 1.74 billion kronor, according to analysts polled by SME Direkt.

“Our excellent result performance further strengthens our conviction that Skandia as a standalone company is a very attractive investment proposition for our shareholders,” chief executive Hans-Erik Andersson said in the statement.

Andersson is an outspoken opponent, along with most of his fellow board members, of an unsolicited takeover bid lodged in early September.

The offer values Skandia at 44.9 billion euros and would, if successful, lead to the creation of Europe’s eighth-largest insurer.

Skandia’s results announcement came a day after Old Mutual delayed by almost a month the closing date of its offer for Skandia, which will now expire on December 16 instead of November 21.

But Old Mutual’s finance director Julian Roberts also insisted that it would not improve its offer.

“We don’t intend to increase the price. We believe the price we have offered is fair,” he told reporters.

Old Mutual has said that it wants a 90-percent support level from the Swedish group’s shareholders.



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."