London- and South Africa-listed financial-services group Old Mutual has received acceptances for 68,6% of Skandia shares under its R38-billion offer for the Swedish insurer, up from the 64,28% it had received under the first offer period, which closed on December 16, the company announced on Monday.
Old Mutual has also extended its offer period for Skandia, which had closed on January 12, until January 23.
Expectations had been that Old Mutual was likely to unveil a higher level of acceptances, 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.
The group said in a statement that other acceptances are in the process of calculation and validation, and a further announcement will be made on Tuesday.
“The process of obtaining regulatory approval from financial regulators continues to advance,” Old Mutual commented. “Approvals have now been received from financial regulators in Sweden and most other jurisdictions. Currently, approval from the United Kingdom and a small number of other jurisdictions remains outstanding. These approvals are expected to be received shortly and settlement is anticipated to begin by the end of January.”
Old Mutual has also received all relevant anti-trust clearances, it added. It reserves the right to extend its offer for Skandia further beyond January 23.
The Old Mutual bid has met with stiff opposition from the Skandia board and some of Skandia’s Swedish shareholders who have holding out for a higher price. This has prevented Old Mutual from garnering its hoped-for acceptance level of 90% or more, which would maximise cost and tax savings between the two companies.
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.
However, once the offer has become unconditional, Old Mutual will have the option to buy more Skandia shares on the open market — up to an additional 10% stake. This would take it beyond the key 75% shareholding level that would allow it to benefit from tax savings in the UK, 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.
Old Mutual’s share price fell following the news, reversing earlier gains to trade at R18,70 on the JSE by 10.22am on Monday, down 0,5% or 9 cents from Friday’s close of R18,79. — I-Net Bridge