Skandia “will remain listed in Stockholm”

Swedish insurer Skandia on Wednesday acknowledged that its Anglo-South African rival Old Mutual, which has bought a majority of its shares, could soon gain control, but said it would remain listed in Stockholm.

“It is clear that Old Mutual could become Skandia’s principal shareholder, under the condition that Old Mutual receives approval in the outstanding regulatory matters,” Skandia’s board said in a statement.

The company added however that it “has a large number of shareholders who have not accepted the offer. It is thus clear that Skandia will continue to be a listed company.”

The comments came a day after Old Mutual announced that investors holding 62.5 percent of Skandia’s shares had accepted its hostile takeover bid, but that it would extend the deadline for its 4.8-billion-euro offer by three weeks to January 12, 2006.

“I am delighted that holders of a majority of shares in Skandia have recognized the exciting potential of combining our two companies,” said Old Mutual chief executive Jim Sutcliffe, adding that “I look forward to welcoming every member of Skandia’s staff around the world to the Old Mutual family.”

If the deal goes through, the merged companies will become the eighth largest insurance group in Europe.

“Since the acceptance period has been extended for an additional three-week period, the definitive extent of Old Mutual’s acquisition pursuant to the offer cannot be determined until after the expiration acceptance period,” Skandia’s board said defiantly.

“Skandia shareholders will continue to have the right to withdraw tendered shares during the extension period … Skandia will continue to be governed as an independent entity as long as there are minority shareholders still holding shares in Skandia,” it insisted.

On December 1, Old Mutual slashed its target level of shareholder support in the bid, which is overwhelmingly backed by its own shareholders, to 50 percent from 90 percent.

Although the company has easily passed its new target, the 62.5 percent of Skandia shares it currently holds fall short of the 67 percent it would need to replace the Skandia board.

Analysts however say there is little doubt that the bid will succeed.

“Old Mutual will end up with more than 62.5 percent, because it will be tax beneficial for shareholders to sell in January … Eventually they will have a definite majority,” Cheuvreux Nordic analyst Frederik Gutenbrent told AFP.

“I don’t see any upside to sit in the minority if you represent only 15 or 20 percent … The stock will not be liquid,” he added.

Old Mutual lodged its hostile offer in September for 43.60 kronor per Skandia share, valuing Skandia at 44.9 billion kronor.

The offer deadline was initially set for November and had been prolonged to December 16 before the latest extension.

Following the Skandia statement on Wednesday, the Swedish company saw its stock inch up 0.22 percent to 46.50 kronor per share in morning trading.



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."