Skandia’s actions compatible with good practice in the stock market

The Swedish Securities Council today commented on three separate complaints filed by Old Mutual against Skandia (AMN 2005:47). The complaints address a number of different issues. The Securities Council finds that Skandia’s actions are not in conflict with good practice in the stock market in any respect. The Council’s statement concludes the following, in summary: • That Skandia’s information activities in response to Old Mutual’s hostile offer are compatible with good practice in the stock market. In the Council’s opinion, it is a matter for the Stockholm Stock Exchange and not the Securities Council to rule on the content of Skandia’s information document. • That the sending of a letter to Old Mutual’s largest shareholders by Skandia’s chairman is compatible with good practice in the stock market, even though the letter should have been preceded by information to the market. However, the letter did not contain any previously non-published information. • That Skandia’s board and management have not disregarded good practice in the stock market in connection with Old Mutual’s prospectus work and work on regulatory matters. • That Skandia has not been obligated to disclose ABN Amro’s fairness opinion in its entirety. A summary of the document has been made public. • That Skandia has not been obligated to disclose a fairness opinion issued by Morgan Stanley, which was not an impartial party. The Council does not feel there is justification for Skandia’s claim that proceeding with the offer with a lower acceptance level of 90% in a case like this is “obviously counter to the accepted norms of corporate behaviour in the Swedish market”. The Council refers to the fact that it is not all that uncommon that a 90% condition is lacking or is withdrawn and that no Swedish practice with respect to hostile offers has been established on this point. As a clarification, Skandia wants to note that this claim in the letter was based on a review of over 130 offers in the Swedish market during the last ten-year period. Fewer than ten of these offers were carried out at levels between 50% and 90%. None of these pertained to companies in the financial sector with operations requiring regulatory permits. Several pertained to small companies, and in many cases the offers were harshly criticised. Skandia notes that the Council, at the request of Old Mutual, has kept secret certain information in the matter of the offer process. Skandia has asserted that all information provided to the Council can be made public. What has not been reported on in the Council’s statement mainly concerns details on how Old Mutual’s bid was gradually lowered and information about Old Mutual’s expectations that Skandia actively participate in solving Old Mutual’s financing problems. It also pertains to information about ABN Amro’s unwillingness to issue a fairness opinion when it became clear that the Board would not recommend the offer. The Swedish Securities Council has previously ruled (AMN 2005:46) that Old Mutual acted in conflict with good practice in the stock market when, in its information brochure to Skandia’s shareholders, it did not report that Skandia’s board had advised Skandia’s shareholders to reject Old Mutual’s offer. The Securities Council ruled that the information brochure was misleading on this point. Old Mutual has also acted in conflict with a statement by the Securities Council with respect to the terms of its offer. This action by Old Mutual gave rise to a special statement from the Securities Council (AMN 2005:36). For further information, please contact: Gunilla Svensson, Press Manager, tel. +46-8-788 25 00 Citigate Dewe Rogerson, tel: +44 20 7638 9571 Michael Berkeley, tel: +44 7713 509316