Intense talks in Old Mutual bid to take over Skandia

South Africa's largest insurer, Old Mutual, spent the weekend in intense negotiations with Sweden's company, it emerged today.

But the talks mean further uncertainty for employees in Hampshire because it was unclear today whether Skandia, which has one million policyholders in Britain, is agreeable to the offer.

Skandia board members are reportedly pressing for a higher price, or to keep the company independent.

There has also been an unconfirmed report that Skandia, which sponsors the world-famous sailing regatta at Cowes, has rejected the bid outright.

Staff at Skandia's various offices in Southampton, including the landmark head office opposite the Civic Centre, are closely following the developments.

Many of them, including top-level management, stand to make fortunes if London-listed Old Mutual snaps up their shares at a high price.

But there is also concern that Old Mutual, if it succeeds in a takeover, may carve up the Skandia empire and look to make cost savings.

Old Mutual said talks continued with Skandia and shareholders, which had led it to consider a SKr42 (£3.06) a share offer, with 40 per cent in cash and the balance in stock.

Old Mutual said it believed a majority of shareholders would back its proposed offer, though added it was prepared to make "selective modifications" to meet any shareholder concerns.

It also expressed its preference for backing from the Skandia board.

Skandia said it would consider its response "if and when a final offer is presented". It declined to comment further.

A bid of SKr42 a share would be 20 per cent more than Skandia's closing share price on May 12, the day before Old Mutual said it was in talks to buy the insurer.

Some Skandia board members are believed to be looking for as much as SKr50 (£3.65) a share, though financial sources said it had already received a number of independent fairness opinions in line with Old Mutual's indicative offer.