Johannesburg - Old Mutual, which has launched a R38 billion bid for Swedish financial services group Skandia, indicated yesterday that it was willing to walk away from the transaction if it did not secure the 90 percent shareholder acceptance level it was seeking.
"We want to have the whole company," said Julian Roberts, the finance director at Old Mutual. The group launched the cash and share offer last month.
The group remained determined to take full control of Skandia despite Swedish-based shareholders representing more than 10 percent of Skandia saying they would vote against the deal. "We would only go ahead at a lower level if it made absolute economic sense," Roberts said.
Old Mutual has warned that without full ownership it would be unable to deliver the �70 billion (R799 billion) a year it expected in takeover synergies and savings.
Refusing to provide details on the number of shareholders who had provided letters of intent, Roberts said: "While we have an indication of some shareholders accepting the offer ... there is still some way to go."
Skandia's release of its ownership structure showed that foreigners held 59.8 percent of its business. Swedish shareholders owned 40.2 percent, of which 13.4 percent was held by institutions, 10.4 percent by unit trusts and 16.4 percent by individuals.
Its three largest shareholders, Fidelity unit trusts, Cevian Capital and Burdaras, representing 11.6 percent of Skandia's stock at the end of last month, have indicated that they would be backing the bid.
Old Mutual would need 90 percent of the shares to "effect a minority squeeze-out", said Roberts. A 75 percent acceptance level would allow Old Mutual to recognise Skandia as a subsidiary, treat it as such for tax purposes in the UK and delist it from the London Stock Exchange.
According to a timetable released by Old Mutual on Friday, Old Mutual's shareholders will be asked to vote on the offer at an extraordinary general meeting on November 14, a week before the offer will be put before Skandia shareholders on November 21.
Old Mutual's shareholders will be asked to authorise the increase of the group's share capital by 25 percent to �750 million, which would be done through the issue of 1.5 billion new Old Mutual shares.
This means existing shareholders "will suffer a reduction in their proportionate ownership and voting interest". And their decision would have to be based on restricted information on the takeover target and without an explanation on the costs of the transaction.
Old Mutual expected the aggregate costs and expenses in connection with the transaction to amount to about �75 million. Roberts said that was over and above the �71 million cost of realising synergies and savings of an estimated �70 million a year.
But these were based on limited access to information on Skandia other than published information and material collected during its due diligence. Old Mutual's shares closed 0.96 percent lower at R15.43 in Johannesburg yesterday. The life assurance sector fell 1.16 percent.