Standard Life rejects bid offer, announces plans for IPO

Standard Life rejects bid offer, announces plans for IPO

	Published : Tue, 18 Apr 2006 10:20 By : Richard Owen Print this Story

LONDON: Britain's mutual fund insurer Standard Life confirmed it had an all-share merger offer and that it had rejected the offer as it felt it is not in the "best interests of members". The identity of the suitor was not revealed.

The company, the largest mutual fund insurer in Europe, said it is going ahead with its planned initial public offer to raise 1.1 billion pounds on the stock market. The IPO is expected to be the biggest in the past five years.

The company also revealed that it had received a number of other approaches, including proposals to take shareholding in the business and that it had rejected these offers. The firm said in a statement that the directors have concluded in each of these cases that a transaction is not in the best interests of members, policyholders and the business, "having regard to factors such as the proposed valuation and other terms".

The flotation, at 1.1 billion pounds, will give the company a market value of 4.8 billion to 5.5 billion pounds. It will be the largest since the listing of Orange in 2001, which raised 1 billion pounds.

The company also brought out details of its financials for 2005, which showed that it had returned to profits and increased new business contributions, following a strategic review of its performance starting January 2004. It had pretax profit of 152 million pounds for the year under IFRS accounting standards, against a loss of 340 million pounds in 2004.

The company claimed its loss in 2004 had been partly because of the stricter new solvency standards for insurers, introduced that year in the wake of the 2000-2003 stock market downturn. The company has since been reducing its exposure to less lucrative segments of the market. It had also cut down some 3,000 jobs.

Standard Life's members will vote at a special general meeting on 31 May in Edinburgh whether to go in for a flotation or not. The company will require approval from three quarters of the total voting members for the flotation.

The company announced that half of its 2.4 million eligible policyholders will get payments of 1,000 pounds or more each from the flotation while the rest will receive amounts ranging from 500 pounds to 1,000 pounds. It intends to use the funds raised in the listing to expand its activities in the U.K. and support capital adequacy.

The company had announced plans to go public two years ago, stating tougher regulatory capital requirements and a declining market for with-profits products as reasons for the listing.

Chief executive officer Sandy Crombie has made preparations for the IPO, cutting thousands of jobs and reducing the company's U.K. market share to focus on profit. Ironically, officers at the firm, including Crombie, had fought against a plan to go public in 2000, which would have given members more than 10 times what they are expected to gain now.