Old Mutual tightens grip on Skandia

Anglo-South African insurer Old Mutual PLC tightened its grip on Skandia Insurance Co, announcing that shareholders holding 68.6% of the Swedish insurer's equity had accepted its hostile bid for the group.

That is up from the 64.3% acceptance level Old Mutual reported on December 21. The insurer said further acceptances were still being counted, and that it would make another announcement tomorrow.

Old Mutual also said it was extending the offer period until January 23 in order to give wavering Skandia shareholders extra time to decide. The last deadline for acceptances was on Friday last week.

Analysts believe that foreign shareholders, who hold 72% of Skandia’s equity and are seen as more inclined to accept the offer, are likely to carry Old Mutual beyond the 75% ownership threshold in the weeks ahead.

Under Swedish takeover rules, this would allow Old Mutual to gain management control of Skandia. But it falls short of the 90% control that Old Mutual needs to delist Skandia’s shares from the Stockholm stock exchange.

Old Mutual’s bid for Skandia, launched in September, marked the start of one of the bitterest takeover battles of recent years. Skandia’s management, led by chief executive Hans-Erik Andersson rejected the offer as too low, and contested the bid at every stage.

Old Mutual, which makes the bulk of its revenue in South Africa, is keen to buy UK and Scandinavia-focused Skandia in order to build up a more diversified global business.

The insurers have a combined market capitalisation of about £8 billion, ranking the merged group as Europe’s eighth-biggest insurer.

Old Mutual’s cash and paper offer is currently worth about 48.2 Swedish kronor per Skandia share, valuing the group at about 49 billion Swedish kronor, or £3.6 billion.

Old Mutual shares were up a penny at 176 pence by 8.55 am.



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."