No longer foundation for Merger between DnB and Storebrand
Merger Negotiations Abandoned:
No longer foundation for Merger between DnB and Storebrand
On 29th June, DnB cancelled the integration agreement. Following renewed efforts to find a common platform on Sunday which did not succeed, the Board of Directors of Storebrand ASA has in a meeting on Sunday 30th June unanimously voted to abandon the merger negotiations with DnB. The formal reason for the break is DnB’s demands for a change in the exchange ratio that is wholly unacceptable to Storebrand. This is based in part on allegations of significant discrepancies identified in the due diligence process. Storebrand has proposed that the contended issues are decided by an unbiased third party in accordance with the agreement’s stipulations. This proposal has been rejected by DnB. It is the view of Storebrand’s Board that there are no reasonable grounds for demanding a significant change in the exchange ratio in favour of DnB’s shareholders.
On 29th May Storebrand and DnB announced that an agreement with a view to merge the two companies had been entered into, in order to create a leading financial services group in Norway and the Nordic region. The management and Board of Storebrand have throughout the merger negotiations abided by the integration agreement and been strongly motivated to contribute to such a solution. The reasoning behind this has been that the company has deemed the creation of a leading financial institution with Nordic growth ambitions to add value for customers, employees and owners.
No reasonable grounds
Both parties have presented claims of discrepancies of approximately equal magnitude following the due diligence process. The parties have commented on and in all material respects rejected all claims of discrepancies. The assertions of material findings in Storebrand have no reasonable basis in facts and are refuted by Storebrand.
The Board of Storebrand reiterates that both Storebrand and DnB are publicly listed companies with broad analyst coverage both in Norway and internationally. They are both subject to, and comply with, the strict regulations of the Banking, Insurance and Securities Commission of Norway. A highly regarded auditor audits Storebrand’s accounts, and the company is rated by renowned rating agencies.
As regards Finansbanken, the portfolio is assessed every quarter, and the portfolio has also been examined by independent specialists. Their most conservative recommendations of increased loan loss provisions have been followed in the quarterly reports on an ongoing basis.
The agreement has not been adhered to
In the integration agreement that was entered into on 29th May it was agreed that an independent arbitrator would be used if the parties could not agree on reported discrepancies following the due diligence. DnB has rejected using an arbitrator as prescribed in the agreement.
Focus on Profitable Operations
Storebrand’s first priority is to maintain full focus on operating profitability and continue the company’s strategy for its core activities. Profit enhancing measures already started are showing results according to plan. New cost reducing and profit enhancing measures will be carried out in order to bring operations into line with the developments in equity markets. It is a competent and very motivated organisation that continues the excellent dialogue that has been established with our customers.
Satisfactory Solidity
The Storebrand Group, including Finansbanken, has a good and completely satisfactory financial position. Storebrand Life has a satisfactory capital base. We have a good dialogue with the rating agencies and have no reason to believe that there will be changes in the ratings of Storebrand or Storebrand Life as a consequence of the break with DnB.
Storebrand’s liquidity situation is comfortable. The holding company has in excess of NOK1.5 billion in cash and marketable securities and an unutilised credit facility of EUR225 million. Finansbanken has an unutilised credit facility of EUR150 million. Additionally Nordea, our main bank counter party, has increased its committed credit line to the Storebrand Group by a further NOK 2 billion.
DnB's Ownership in Storebrand is Financial
DnB has in connection with the break in the merger negotiations confirmed that they will now act as a financial investor in Storebrand.
Storebrand ASA
Oslo, 1st July 2002
To the press:
You are hereby invited to a combined press and analyst presentation at Felix Conference Center, Aker Brygge, Oslo at 11.00 (CET).
Contact persons:
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Lars Aa Løddesøl, Executive Vice President, Finance Director
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Tel: +47 2231 5624 or +47 934 80151
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Egil Thompson, Director of Corporate Communications
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Tel: +47 2248 9586 or + 47 934 80012
