Corporate Governance in Modern Financial Capitalism
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Corporate Governance in Modern Financial Capitalism

Old Mutual’s Hostile Takeover of Skandia

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control – both from a national and a global perspective. Using Old Mutual’s takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.
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Chapter 13: Summer of Due Diligence

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand


DIFFERENT OPINIONS REGARDING OLD MUTUAL’S INDICATIVE BID In May 2005, Morgan Stanley had a list of at least 20 different financial houses that had knocked on Skandia’s door. Thus Old Mutual was far from being the only company that had written letters to the chair of the board, although it was the only one that had thus far showed an interest in bidding for Skandia as a whole. Analyst reports supported the rumour that Skandia was the target of a bidding contest. Analysts from ABG Sundal Collier,1 Espen Bruu Syversen and Sigmund Håland, released a report on 16 May; in their analysis, Skandia as a stand-alone company was valued at 39 SEK per share. Their break-up value added up to 47 SEK per share. However, the ABG analysts wrote: ‘this could prove conservative if other bidders enter the field . . . we cannot see it being valued at much less than SEK 50 per share in a takeover/break-up scenario’.2 On 13 May the board reconvened at Skandia’s HQ. Bernt Magnusson had talked to Old Mutual’s CEO the day before, and had been asked to try to obtain clearance from the board for Old Mutual to go ahead with conducting a due diligence. Magnusson had promised to raise that issue at the meeting. The board discussed the current situation of a structural deal becoming more and more of a reality. However, Birgitta Johansson-Hedberg saw no such fit between Old Mutual and Skandia. Karl-Olof Hammarkvist and Kajsa Lindståhl expressed scepticism regarding...

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