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.