Skandia suitor suffers bid blow

UK financial services group Old Mutual vowed to press ahead with a £3.3bn (€4.9bn) offer for Skandia today, despite failing to win over the insurer’s board.

The group will go direct to Skandia shareholders next month with proposals to create a company with a value of almost £8bn (€11.8bn) and a strong position in the markets of South Africa, UK, Sweden and the United States.

It was told by eight members of the 11-strong Skandia board that its proposal undervalued “Skandia's market position, underlying strategic value and attractive growth opportunities.

Sweden-based Skandia’s biggest market is the UK, where the company’s products include unit linked assurance, mutual funds and protection. It also owns Bankhall, a provider of services to independent financial advisers.

The company has almost 6,000 employees – including in London and Southampton - and generated sales of £584m (€860.2m) in the first half of the year.

Skandia told Old Mutual that a proposed combination lacked “industrial logic”, particularly as the two companies had only slightly overlapping operations.

Old Mutual is headquartered in South Africa and has around 5% of its funds under management in the UK.

It described the logic of the deal as compelling and added it provided prospects of “enhanced growth with reduced risk for all shareholders”.

Chief executive Jim Sutcliffe believed it was a view shared by many Skandia investors.

He added: “We have met with holders of more than 60% of Skandia’s shares in recent weeks and received positive indications on the merits of our proposal from a vast majority of them.”

Old Mutual added it was pleased Skandia had chosen to co-operate with the preparation of a shareholder prospectus containing details of the offer and which is expected to be published in October.