London-based insurer Old Mutual is confident shareholders in Swedish savings group Skandia will back its $6 billion bid despite Skandia's divided board rejecting it as too low on Friday.
Old Mutual Chief Executive Jim Sutcliffe said it would launch the offer with the backing of a majority of the owners of around 60 percent of Skandia's shares it had spoken to.
"I am pretty confident," Sutcliffe said. "Based on going and talking to their shareholders ... they are keen to go on."
Old Mutual said it had a target of 90 percent acceptance from Skandia shareholders for the bid to proceed. It will publish its prospectus in mid-October with the tender offer likely to close around the end of November, Sutcliffe said.
Despite its professed confidence, Old Mutual may find it hard to win over Swedish retail investors and some pension funds, who hold between 30 and 35 percent of Skandia's shares, said one London-based analyst, who asked not to be named.
"It's pretty difficult to see Old Mutual get 90 percent."
Sweden's state AP2 pension fund, which, according to Skandia's website, owns 3.2 percent of Skandia's shares as of August 31, said it had decided to reject Old Mutual's bid.
The AP1 fund, with 1.3 percent, said was still considering the bid, while Swedish Handelsbanken's fund arm, with 2.6 percent, said it was awaiting Old Mutual's prospectus.
Fidelity declined to comment and Robur, the fund unit of Swedbank with 2.5 percent, said the board's comments were an important aspect of its own eventual decision on the offer.
The Swedish Shareholders Association, representing small stockholders and against the bid all along, remained outspokenly opposed and demanded the resignation of the three directors who supported the bid, who include Skandia Chairman Bernt Magnusson.
If the deal goes through, it would create an insurance, savings and pensions group with a market capitalisation of 7.9 billion pounds, making it Europe's eighth-largest life insurer.
It would reduce Old Mutual's reliance on South Africa, where it earns most of its income, and would finally make it a force in Britain, where it has its main listing and headquarters.
Skandia, hit by a scandal over excessive management bonuses and perks, would gain access to Old Mutual's capital, allowing for faster expansion than alone, the South African firm says.
Sutcliffe said he did not consider the cash-and-shares bid as hostile, despite the widely expected rejection of Old Mutual's approach by eight out of 11 members of Skandia's board.