100 jobs to go as Old Mutual keeps Skandia

Old Mutual said on Wednesday it will hold on to Skandia and expects to double the funds under management within the next five years, according to a company press release.

“Skandia is every bit as good a business as we believed, with the potential to double in size over the next five years,” said Julian Roberts, Skandia’s chief executive.

“Sales growth is strong and there is a talented team in place keen to move the business forward as we implement a series of initiatives to deliver Skandia’s fullest potential.”

However, Old Mutual said that it would axe up to 800 jobs in Britain and across Europe in cost savings over the next three years following the recent takeover of its Swedish rival.

The news came alongside a stock market update on the integration of Skandia. The job losses represented around 13 percent of Skandia’s workforce, Old Mutual chief executive Jim Sutcliffe said in a conference call with reporters.

Some 600 jobs would be slashed in Britain, owing to the integration of computer networks, while around 100 positions would be cut in Sweden. Others could go elsewhere across Europe, he said.

A spokeswoman for Old Mutual said that the job losses accounted for a much smaller percentage of the group’s total global workforce of 55,000 people.

Old Mutual said today that it would generate annual merger synergies of some £70 million by mid-2008 – including the cost savings related to those redundancies.

The company added that total restructuring costs would amount to £80 million, up slightly from an original forecast of £71 million.

Old Mutual completed the £3.6 billion takeover of Skandia in February after a lengthy hostile battle for the firm.


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."