Old Mutual is bidding for Skandia |
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Wed, 31 Aug 2005 00:35
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LONDON: South African insurance company Old Mutual is negotiating with Sweden's Skandia Insurance Co for a possible 3.2-billion-pound buy-out. Skandia, with its large presence in the U.K., said it is awaiting a formal offer. It is believed that Skandia's board is not convinced with the proposal.
The deal, it it happens, will give Old Mutual a much-awaited entry into the U.K. market. The company said it is satisfied with its talks and said it hopes a majority of Skandia's shareholders will opt for the offer -- 42 pounds for a share, with 40 per cent in cash and the balance in Old Mutual shares.
Skandia in a statement said the talks were continuing and if an when a formal offer comes through, its board will evaluate it.
There are rumours in Sweden that Old Mutual may make a hostile bid to get at the Swedish company, whose market value stands at $5.6 billion.
Skandia has as its shareholders Fidelity Mutual Funds (5 per cent), Icelandic investment firm Burdaras (3.6 per cent), Nordea Mutual Funds (3.5 per cent), Swedish venture capital firm Cevian (3.4 per cent) and the Second National Pension Fund (3.2 per cent). It has been a takeover target for several years. Its operations span the Europe, Asia and Latin America. In Britain it is one of the fastest growing life business firms. It is also into asset management.
Old Mutual's chief executive Jim Sutcliffe wants his firm to spread to places outside South Africa. In 2004, South Africa accounted for 78 per cent of the company's operating profits.
The company said it may make modifications in its offer as sought by Skandia. While there is no official confirmation on the nature of these modifications, it is known in analyst circles that Skandia is demanding a higher cash element for the shares and representation on the Old Mutual board.
Skandia had taken a 80 million-pound write down on the value of its U.K. arm Bankhall.
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