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 21: Old Mutual Acquires Skandia

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


WAIVING THE 90 PER CENT THRESHOLD Old Mutual had a board meeting in London on 28 November 2005. The topic discussed was the possible waiving of the bid condition that stipulated a 90 per cent acceptance by Skandia’s shareholders. At the meeting, Deutsche Bank presented new calculations for Old Mutual that also took Moody’s views into account. Deutsche Bank concluded that, given the outlook that Skandia could solve its own financing, it should be possible for Old Mutual to live with a shareholder minority. However, Deutsche Bank’s James Agnew admitted that the risk involved was high. Jim Sutcliffe was in Stockholm at Lars Lenner’s office when the two participated in Old Mutual’s board conference call. They all discussed the various thresholds linked to a shareholding in Skandia: 90, 75, 66.7 and 50+ per cent. Lenner explained the rationale behind lowering the acceptance condition all the way to 50+ per cent, without stopping at 66.7 per cent. Once again, the difference between UK and Swedish takeover rules mattered. Lowering from 90 to 50 per cent in UK regulations meant that a new bid was required. In Sweden, however, such a change in a bid condition could be done simply by a stock exchange announcement. Lenner claimed that if one took the current hedge fund activity into account, then Old Mutual was already supported by 50 per cent of the shareholders. Requiring 66.7 per cent would give the hedge funds the possibility not to hand in their shares, thereby providing them with...

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