Old Mutual announced today it had received acceptances from 62.5% of Skandia’s shareholders to date for its R38bn offer, a level CEO Jim Sutcliffe said he felt "very comfortable" with.

The offer has been extended until January 12, 2006, in an effort to gain further shares from previously reluctant Skandia investors.

The announcement marks the end of Old Mutual’s long quest for a substantial presence in the UK financial services market, which Skandia will certainly bring.

Old Mutual has been on the look- out for possible acquisitions in the UK for the past three years or so, having always regarded that market as the third essential leg to underpin its global strategy, complimenting its South African and US operations.

Further details as to exactly which shareholders have tendered their shares, and which have remained holdouts, are expected to be known over the next few days - international investors were reported to be much more favourable towards the offer than Swedes, with a few large Swedish shareholders representing just over 15% of Skandia’s shares having come out publicly against the deal, saying it undervalued Skandia’s business.

Old Mutual confirmed reported takeover talks between itself and Skandia in May, with what began as a "friendly" deal, as described by Sutcliffe. The news sent Old Mutual’s share price 6% lower on the day, as investors speculated over how many new shares the group would have to issue as part of the takeover.

On September 2, Old Mutual eventually unveiled its bid of 43.60 Swedish kronor (SEK) per share, for a total of SEK 45 billion, a price market watchers generally described as fair. It represented a 25% premium to the market price on May 12, when the offer was initially discussed.

Old Mutual also made the offer conditional on receiving a 90% acceptance level from Skandia shareholders.

However, the offer met with opposition from the majority of directors on Skandia’s board, turning the offer hostile and sparking a rift that eventually forced the resignation of the Skandia chairman, who had voted in favour of the deal. Throughout September and October a succession of Skandia shareholders publicly came out against the offer level, saying it undervalued the group’s business.

To help underpin the opposition, in mid-October Skandia management even announced details of its "Turbo Plan", a multi-year stand-alone programme to boost earnings growth and improve margins.

In the face of this opposition, on December 1 Old Mutual opted to lower the conditional shareholder acceptance level from 90% to 50%, while also fixing December 16 as the offer closing date to provide more clarity to shareholders and speed up the process.

Sutcliffe, meanwhile, reaffirmed the group’s intention not to raise the offer price, saying Old Mutual would walk away from the deal on December 16 should the 50% target not be reached.

During the entire takeover battle the CEO maintained his confidence of getting the requisite shareholder support, saying he had received invaluable input from Old Mutual shareholders and substantial positive reaction from the majority of Skandia shareholders. Indeed, Old Mutual shareholders voted overwhelmingly in support of the takeover.

Now, in the weeks to come, Old Mutual management will be holding discussions with the management of Skandia regarding the structure of the combined board of the merged company.

Old Mutual has been working hard to obtain all the requisite regulatory approvals by mid-January, Sutcliffe has said, and hopes to be able to hold the merged group’s first extraordinary general meeting by the end of January, as soon as the transaction had closed.

It is possible the offer could be extended past January 12, should all of the regulatory approvals not yet been received.

According to Old Mutual’s estimates, a successful takeover of Skandia by Old Mutual would create Europe’s eighth largest insurer by embedded value (EV) at £7.5bn or 137 pence per share, and the seventh largest in terms of assets under management at £192bn. The merged group would also be ranked at about number 35 on London’s FTSE exchange.

Of the enlarged company’s pro-forma value of new business (pre-tax), 32% would come from South Africa, 25% from the US, 18% from the UK, 15% from Europe and the rest of the world and 10% from Sweden.