South African insurer Old Mutual is expected to make a formal proposal for Swedish insurer Skandia within the coming days. Swedish press sources have, however, suggested the deal could face difficulties due to concerns among the majority of Skandia's board about Old Mutual's connection with the Zimbabwean regime of Robert Mugabe.
At last weekend’s board meeting, only three Skandia directors were reported to be in favor of a bid, while eight were against. The majority, according to Swedish Radio, cited the Mugabe link as the key negative factor, and said they would prefer Skandia to continue as a standalone business.
Swedish newspaper Dagens Nyheter, on the other hand, today said holders of 13.6% of Skandia Insurance’s shareholders see solid industrial logic in a merger with Old Mutual and would regard any bid positively. Skandia’s top 10 shareholders, who represent 27.6% of the company’s shares, said they would withhold comment until there is a formal offer to evaluate.
Old Mutual owns 24% of Zimbabwe’s leading newspaper, in which the dictatorship has a majority holding. The paper’s editorial line is therefore regarded as strongly pro-government. The insurer said on Monday it would consider making an offer to acquire Skandia at SKR42 per share, in a deal which would comprise of 60% in shares and 40% in cash.