London- and South Africa-listed financial-services group Old Mutual is currently counting acceptances received from shareholders of Swedish insurer Skandia for its R38-billion offer for the company, which closed at midnight on Thursday, according to a spokesperson for the group.
Old Mutual is unlikely to reveal the final results of the count until Monday, it said on Friday.
By December 16, the first closing date for the offer, Old Mutual had acceptances from Skandia shareholders representing 64,3% of Skandia’s issued shares, giving the group the majority it required after having launched its formal bid back in September.
Expectations are that Old Mutual is likely to unveil a far higher level of acceptances on Monday, given that the percentage of non-Swedish Skandia shareholders, regarded as more friendly to the offer, rose to 72,1% in December from 63% a month earlier.
As foreign shareholders are seen as more likely to accept the Old Mutual offer than Swedish shareholders are, Old Mutual should be able to claim a higher acceptance level for its offer, which has met with opposition from the Skandia board and some of Skandia’s Swedish shareholders who are holding out for a higher price.
Should all of the additional 9,1% foreign shareholders accept, Old Mutual would be able to claim a 73,4% acceptance level.
However, in early January a number of minority Skandia shareholders showed they would not give in easily, joining forces under the leadership of the Second Swedish National Pension Fund (AP2) to make demands from Old Mutual regarding their board representation and rights to approve all future transactions between Old Mutual and Skandia.
Swedish investors remaining opposed to the offer are reported to include the First, Second and Fourth state AP pension funds, Nordea Funds, Robur Funds and Handelsbanken Funds.
Old Mutual has continued to reject the possibility of raising its offer for Skandia, setting the majority shareholder and minorities against each other even as the offer period expired. Monday’s final results should indicate whether these Swedish shareholders have finally capitulated, or if Old Mutual faces the prospect of having to work with somewhat hostile minority shareholders, at least for the near-term.
However, once the offer has become unconditional, which is expected to happen at the end of January, Old Mutual will have the option to buy more Skandia shares on the open market — up to an additional 10% stake.
This could take it beyond the key 75% shareholding level that would allow it to benefit from tax savings in the United Kingdom, and move Skandia’s listing to the more illiquid “B” list of the Stockholm exchange.
The more illiquid Skandia’s shares become, the more likely minorities are eventually to sell their stakes. Therefore, it is more a question of when, rather than if, Old Mutual will reach its original goal of owning a 90%-plus stake in the Swedish insurer. — I-Net Bridge