Skandia settles long-running dispute over sale

Skandia AB, the Swedish subsidiary of Anglo-South African Old Mutual Plc, announced on Friday that it has come to a favourable settlement in its six-year dispute over the sale of its asset management business.

Under a deal brokered by Swedish arbitrators, Skandia’s mutually run life insurance unit, Skandia Liv, has lost a claim for part of the proceeds of the £260 million ($460 million) disposal in 2002, Old Mutual said in a statement on Friday.

“The key point is that the arbitration committee ruled that Skandia doesn’t have to compensate Skandia Liv for the actual sale price,” said Greig Paterson, an analyst with Keefe, Bruyette and Woods, to the Reuters news agency.

Skandia Liv had claimed it was entitled to part of the proceeds of the sale of Skandia Asset Management, which managed Skandia Liv’s assets.

The business was sold to Norway’s Den Norske Bank.

However, the arbitrators ordered Skandia to pay Skandia Liv £47 million in compensation for excessively high asset management fees charged by the investment management division under an agreement negotiated by the parent company the same year.

“I’m satisfied that the arbitrator agreed with Skandia Liv on the principal issues,” said Skandia Livs chairman Bo Eklöf.

“At the same time I and the rest of the board obviously had hopes that the arbitrators would offer our policy holders a higher sum. I respect the panel’s ruling, however, and can announce that part of the earlier transfer will be returned to policy holders through the compensation claim.”

Old Mutual said the payment will be largely covered by the £41 million it set aside for that purpose when it acquired Skandia in 2006.

“We are pleased with the outcome of the ruling. We can now put this behind us and continue to focus on achieving our strategic aims for the Swedish business,” Old Mutual Chief Executive Julian Roberts said in a statement.


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."