Insurer Old Mutual is selling its non-core Nordic business for 22.5 billion Swedish crowns (£2.1bn) to Skandia Liv, sending its shares up 10 per cent on expectations the deal will boost investor re- turns.
The businesses being sold comprise Old Mutual’s long-term savings and banking operations in Denmark, Norway and Sweden operating under the Skandia brand, and Old Mutual hopes the sale will cut debt and enable it to return capital to shareholders.
Old Mutual, which bought the Skandia businesses for around £3.9bn towards the end of 2005, has come under pressure from shareholders to divest non-core assets to improve returns.
“The sale of Nordic to Skandia Liv represents a truly unique opportunity to create value for both Skandia Liv’s policyholders and Old Mutual’s shareholders through unlocking significant synergies from the combination of Skandia Liv and Nordic,” chief executive Julian Roberts said.
Mr Roberts added Old Mutual’s Skandia UK business would not be affected by the sale, and Old Mutual expected to complete the deal towards the end of the first quarter of 2012.
“This sale price is significantly in excess of our sum-of-the-parts component for these businesses of around £1.4bn,” Goldman Sachs said.
Old Mutual has recently embarked on a programme of selling businesses no longer part of its core operation.
The companies said the sale would lead to some “synergies”, but did not have any detail on whether or not the deal would result in job cuts.