Figures published today by Swedish insurer Skandia suggest the makeup of its Nominating Committee could be as split as its own board over the merits of the bid offer from Old Mutual.
Rules adopted last year for corporate governance reasons mean the Committee – which puts forward names for directorships at the company’s annual general meeting – is made up of representatives of the four top institutional shareholders, plus one representing smaller shareholders. The caveat is the top four shareholders must be prepared to put forward candidates to represent them in the Committee.
The figures out today name the four largest known institutional shareholders as Fidelity (5%), Cevian Capital (3.4%), Burdaras (3.2%), and Second National Swedish Pension Fund (3%).
The Second National fund has already announced it is against the bid offer as it currently stands as undervaluing Skandia.
In contrast, Old Mutual has made its own statement today saying its bid is supported by the three largest shareholders – Fidelity, Cevian Capital and Burdaras - representing some 11.6% of Skandia shares.
However, looking down the list published by Skandia, three of the subsequent fifth to 11th largest shareholders have also declared their opposition to the deal.
Robur, and the First and Fourth National Swedish Pension Funds, together representing 4.5% of the company, have rejected the deal – 7.5% including the Second National fund.
This opposition has already caused Old Mutual to drop its target of gaining 90% shareholder support for the bid offer, although it remains confident the £3.3bn price on the table is enough to push through the acquisition.
Key to the outcome of any deal may be Swedish banks SEB and Nordea as the latter owns a 2.5% stake through its mutual funds, while SEB mutual funds owns 1%, SEB 0.8% and SEB – Trygg Forsakring owns another 0.8%, Skandia's figures show.
As of this morning, for example, there has been no statement of intent on the bid by Nordea on its website.
Quite apart from their particular stakes, these institutions could potentially place Old Mutual in a challenging situation if it succeeded in its bid despite the addition of these names to the list of domestic shareholders voting against the deal. The market opportunities and “synergies” cited as original reasons for pursuing Skandia may become perceived as more difficult to achieve if the Nordic region’s biggest banks put up a united front against what many of their customers see as an outsider organisation of unknown quantity and quality.
Also not known at this stage is which way the smaller shareholder representative on the Committee will go in the issue of the bid offer. This means the Committee could be split along a 3:2 vote when it comes to nominating future directors.
The annual general meeting will not take place until next year, but the members of the Committee will be officially announced when Skandia presents third quarter results on 18 November.
Old Mutual shareholders will themselves vote on the bid on 14 November through an extraordinary general meeting, according to the prospectus outlining activities of the next couple of months.
The offer will open 17 October and closes 21 November and if accepted by both sets of shareholders, dealing in new Old Mutual shares - representing the single combined company - will then start in January on the London and Stockholm stock exchanges.
A continuing issue in the takeover battle is the lack of clarity of foreign versus domestic shareholders. Those compiling the latest shareholder figures for Skandia published today state quite clearly the 59.8% foreign ownership is on the basis of analysis of just 57% of outstanding shares. This is because the statistics “do not include shareholders who are registered via a foreign custodian bank” or “foreign holdings registered via a foreign custodian bank”.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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