Although Skandia's board of directors has advised the insurer's shareholders to reject Old Mutual's $6.02 billion takeover bid, the South African insurer plans to go ahead with the purchase and complete it by mid January.

Eight members of the Skandia board argued against the takeover, saying the company has recently strengthened its business model by deciding to concentrate on more profitable products, rather than higher sales volume.

"In recent years, Skandia has been forced to focus on the wrong things. Much energy has been spent on dealing with previous years' affairs and prolonged structural discussions," the majority of the board said. "Now that management can once again channel its energy into developing Skandia's business, Skandia is in the midst of an interesting phase of development."

Citing a report they commissioned from Morgan Stanley specifically on Old Mutual's offer, they further argued that Skandia's current market value does not reflect its growth potential. Further, they said, there are few, if any, overlapping synergies between the two companies.

But three members of Skandia's board, including Chairman Bernt Magnusson, believe the offer is on par with offers for other European life insurance companies. This minority also noted that with a larger capital base, Skandia would be able to offer more products with guarantees.

Fox-Pitt Kelton analyst Mikir Shah agreed that Old Mutual's offer was a good one. The Skandia board "hasn't made a very convincing defense argument," Shah told Bloomberg. The board's minority "has made more convincing arguments in support of the deal, which any reasonable shareholder will support."

Echoing Shah's sentiments was Lars Borger, managing director at Cevian Capital, which has a 3.4% stake in Skandia. "This deal would be good for the shareholders and policyholders of Skandia," Borger told Bloomberg. "It makes industrial and financial sense."

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