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Swedish giant fell from crest of a market wave

Old Mutual’s bid to buy Skandia comes after a five-year period that has seen boardroom controversy and falling markets wipe 90 per cent off the value of the Swedish company.

Skandia rode the surging stockmarket tide in the late 1990s to become the third-biggest Swedish company. Between 2000 and 2001, it paid over £170m in bonuses to senior staff after removing ceilings on bonus payments. The issue led to the resignation of chief executive Lars Ramqvist.

Skandia’s UK boss Alan Wilson was reportedly paid £8.7m in bonuses between 1997 and 2000 in addition to a £400,000 annual salary. He defended the payments, saying he had added considerable value.

Old Mutual paid £525m for Birmingham stockbroker Gerrard in 2000, selling parts of the business before selling the firm to Barclays for £210m in 2003. Old Mutual said it would use the proceeds from the sales to build up a war chest to fund expansion and has since amassed £1bn, which is roughly £2.2bn short of Skandia’s market value.

Hargreaves Lansdown investment manager Ben Yearsley says: “Looking from a fund management basis, it is a fairly complementary fit. Skandia is strong in multi-manager while Old Mutual is strong in quant-based equity management.

“On a corporate level, I would imagine that there is probably very little overlap between the firms, with the exception of the UK businesses.”


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