Skandia says Old Mutual should æwalk awayÆ
Stephen Gunnion
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Financial Services Editor
SKANDIA says less than half of its shareholders are likely to accept Old MutualÆs offer to buy the Swedish savings group when it expires in about a weekÆs time, and Old Mutual should then walk away rather than destroy value for shareholders of both companies.
While Old Mutual has claimed that a large percentage of shareholders had indicated their support of its R38bn offer, Skandia CEO Hans-Erik Andersson yesterday said the group had met international shareholders, the majority of whom had indicated they would not tender their shares to Old Mutual.
Old Mutual has reserved the right to waive the minimum 90% acceptances of the offer, which means it can still take control of Skandia if more than 50% of shareholders accept by the closing date on November 21.
If it receives less than 50%, it can extend the offer.
Andersson said while about 15% of shareholders had ôclearly statedö they would not sell their shares, an additional number of shareholders had also indicated they would stand by Skandia.
ôI cannot reveal their names, but they are not insignificant,ö Andersson said. ôIf they can get 90% or close to that then clearly itÆs game over, but I would be very surprised if Old Mutual gets near 50% on November 21.ö
Andersson said Swedish shareholders association Aktiespararnas had received proxies from about 20000 small shareholders to vote against the bid.
Old Mutual CEO Jim Sutcliffe said last week that while it would be the boardÆs decision to change the minimum threshold, buying 75% of Skandia would still be attractive as it would still receive cost savings through tax synergies and would have to pay less.
However, he said it was still possible to get 90% as some shareholders were likely to change their mind once the closing date for the offer approached.
He said there had also been large swings in SkandiaÆs shareholder register, with an estimated 25% of shares in the hands of hedge funds, who were likely to favour the offer.
Meanwhile, in a note to clients yesterday, Citigroup analyst Johny Lamridis said Old Mutual was likely to receive between 50% and 90% acceptances and ôshould consider walking away from the bidö if it did not get at least 75% of SkandiaÆs shares.
ôHowever, it appears Old Mutual would be willing to proceed below 75% if they were able to reach the two-thirds or 75% level within a short period of time.ö
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