AFRICASCAN COMMENT: An old brothel in need of TLC has found its saviour

subscriber | 20 December, 2005

We have in previous stories compared Skandia with a very old, charming mansion that somehow happened to be turned into a brothel.

The owners were unhappy about it but no-one wanted to put up enough money to save what was essentially a sound house.

Along came Old Mutual and made an offer, knowing full well that all Skandia needed was a bit of TLC.

We belive that Old Mutual´s success in bringing the deal to fruition was less due to its own strategy and more due to Skandia´s disarray. The company´s board, with only Swede´s on the board, did simply not reflect the majority of shareholders. They wanted to play around with other peoples money but did not put up any of their own.

When OM made its offer on 2 September 57 percent of shareholders were foreign, with little or no understanding of the the Skandia board´s chauvinistic behaviour.

For them it was clear that the company was in a limbo and that it needed a dominant shareholder.
While the Skandia board, representing a minority, was vocal about its ”Turbo Plan” it became clearer by the day that OM´s determination would come up tops.

By the end of November 63 percent of Skandia was owned by foreigners as Swedes who that did not want to have OM shares in a mixed share-cash offer at SEK 45 a share sold out to foreign hedge funds.

Then there are the personality issues. Will Berndt Magnusson make a comeback? Will the CEO Hans-Erik Andersson, the man behind the infamous Turbo Plan, resign or will he make peace with Sutcliffe?

Well, to be honest, we could not care less.
What does interest us, besides how OM will be able to build value for shareholders, including the Swedish ones that are attracted to the value if this deal, is what OM will do with the quite enormous power it suddenly will have in a whole range of Swedish board-rooms.

Will Old Mutual be a short-term spoiler or a long term contributor?