19th Oct 2005 08:01
Skandia Insurance Co Ld19 October 2005 Press Release 19 October 2005 Corporate Communications S-103 50 Stockholm, Sweden Telephone +46-8-788 10 00 Telefax +46-8-788 23 80 Www.skandia.com Office: Sveavagen 44 Publication of Shareholder Information Document in connection with Offer fromOld Mutual On 23 September 2005, Skandia's Board of Directors announced that the Board wasof the opinion that Old Mutual's offer was not attractive for Skandia'sshareholders and therefore advised the shareholders of Skandia to reject theoffer from Old Mutual. Skandia has today published a shareholder information document setting out ingreater detail the standalone plans of Skandia, and why it believes that it isin Skandia shareholders' best interests to reject this offer and to allowSkandia's management team, led by Hans-Erik Andersson, to continue to deliver onthe plans that will drive Skandia to create further shareholder value as anindependent entity. The Board of Skandia believes that the standalone plans for the company offergreater value, and that the offer represents an inadequate premium for Skandiashareholders. Lennart Jeansson, Chairman of Skandia, commented: "The Old Mutual offer is insufficient to compensate shareholders forsurrendering control of a business with such compelling and attractive growthprospects to create shareholder value. We believe that Old Mutual's offer isinadequate and we advise shareholders to reject this offer and to supportSkandia's management team in delivering their standalone plans." Hans-Erik Andersson, President and CEO of Skandia, said: "I strongly believe that Skandia has tremendous opportunities to create value inthe years to come. We have a highly attractive and well performing group ofbusinesses operating in growing markets, we have the plans to improveperformance further, and we have the management team and dedicated employees todeliver on these plans." "We have set out in our shareholder document further detail on our Turbo Plan,which we estimate will deliver SEK 1.2 billion of increased profits per yearover the next five years. The Plan was approved by the Board in May. We havealready started the implementation, which gives us the confidence that we canexecute and deliver on the Plan." "Skandia is a niche player in the long-term savings market, with a focus oncustomer service and product development. We are convinced that our compellingproduct portfolio and customer proposition will strengthen our position furtherin this market as a standalone company." The shareholder information document is available in English on www.skandia.comand a Swedish version will be available shortly. Skandia will post a summary ofthe document to its shareholders in the coming days. The key points of Skandia's document are summarised below. Standalone Skandia is a Powerful Value Proposition • Skandia has a compelling standalone future driven by growth - this is thewrong time to sell - Skandia has undergone significant change and has restored focus onprofitability and improved governance - Skandia has delivered on an ambitious programme during 2002-2005and continues to do so - Many of Skandia's growth businesses are reaching critical scale - We expect our plans to deliver strong EV growth and improvingreturn on our embedded value - The next two years offer very promising opportunities • We believe the Old Mutual Offer does not reflect the exciting growthopportunities for our business - The Nordic business has turned around and is delivering strongprofit and sales growth - SkandiaBanken is an integral part of our value proposition tocustomers with exciting and largely untapped potential - Our UK, Asia Pacific & Offshore business continues to growstrongly, and the UK business should be a winner from local market reforms - The Europe & Latin America division has grown significantly inrecent years, becoming a strong third pillar of our business - The mutual fund business should reach profitability on an IFRSbasis in 2006 - IFRS profitability and underlying operating cash flow areimproving • Skandia has a strong balance sheet to fund growth - Skandia has substantially reduced borrowings, delivering a strongbalance sheet to fund growth - Skandia has a number of efficient funding options - Skandia's published embedded value does not fully incorporate allelements of value • The Turbo Plan sets out a clear path to increase the value of Skandiathrough internal cost and revenue synergies - Changing the way the Skandia group is currently organised cangenerate significant internal synergies - The Turbo Plan was developed to increase efficiencies across thegroup, to build a solid platform for future growth and to enhance further ourcustomer propositions in local markets - with estimated savings of SEK 1.2billion p.a. - On 30 May 2005, the Board instructed management to press aheadwith the implementation of all aspects of the Turbo Plan The Old Mutual Offer is Inadequate and Unattractive • The premium being offered by Old Mutual is wholly unacceptable - Old Mutual is offering only a 5.5 per cent premium to Skandia'sshare price adjusted for market movements - The 5.5% premium is unacceptable in the context of similartransactions where average premiums range from 25 to 40 per cent - Old Mutual is overstating the value of its offer by including inits calculations its interim dividend - 60 per cent of the Offer is in the form of Old Mutual shares whichare subject to market risk and a long completion period, which could furtherreduce the premium • Old Mutual's shares are a different investment from Skandia shares withparticular risks - Old Mutual's shares are exposed to markets with a more uncertainoutlook - Old Mutual may be subject to significant currency and other risks - Old Mutual's insurance business has various unattractive riskexposures which Skandia shareholders may want to avoid • The proposed combination lacks strategic logic for Skandia and mayrepresent significant risk - There is no industrial logic to the transaction proposed by OldMutual - The acquisition will increase Old Mutual's indebtedness - webelieve that the combined company will be financially stretched and will beforced to dispose of businesses - The synergy proposals may be overstated and in our view the taxsynergies would be outweighed by tax inefficiencies and opportunity costs - There may be significant revenue and integration risks - We believe Old Mutual's strategic proposals are flawed - OldMutual has proposed to sell SkandiaBanken, a core part of Skandia's Nordicfranchise and an increasingly important channel for Skandia's savings andinsurance products • A standalone Skandia can deliver the full benefits of the synergiesclaimed by Old Mutual - We can achieve greater benefits ourselves - The benefits in the Turbo Plan should be allowed to accruecompletely to Skandia shareholders - Old Mutual are not paying for thesebenefits For further information, please contact:Hans-Erik Andersson, President and CEO tel: +46 8 788 25 00Harry Vos, Head of Investor Relations tel: +46 8 788 3643Jan Erik Back, CFO tel: +46 8 788 25 00Gunilla Svensson, Press Manager tel: +46 8 788 4297 Citigate Dewe Rogerson tel: +44 20 7638 9571Michael Berkeley tel: +44 7713 509316 Legal disclaimer - Forward-looking statements This press release includes forward-looking statements, among other thingsexpectations concerning Skandia's results of operations and financial condition,competitive position, strategy and objective fulfilment, and assumptionsregarding the market in which Skandia operates. Forward-looking statements arenot guarantees of future performance. By their nature, forward-looking statements involve large uncertainty and risk.Factors that could affect actual results in the future include failure toachieve business opportunities and planned efficiencies, adverse outcome inlitigations and fluctuations in the market in which Skandia operates and in thecapital markets in general. Skandia undertakes no obligation to publicly update these forward-lookingstatements. Certain statements in this press release reflect the views or opinions ofSkandia's Board and Management rather than verifiable facts. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Old Mutual PLC